The election year may also be the year of cryptocurrencies

2024-05-27 16:05:59 ET

2024 is shaping up to be a pivotal year for cryptocurrencies due to changes in the political and regulatory landscape in major economies.

There have already been significant developments in the US, such as the SEC’s approval of an Ether spot ETF, which signals a potential softening of regulators’ stance towards digital assets.

This comes as both former President Donald Trump and current President Joe Biden are making strategic moves to court the cryptocurrency community, setting the stage for key elections that could dramatically impact the future of cryptocurrency regulation.

As the world watches, other major economies, including India and the UK, are also grappling with their own regulatory frameworks and political dynamics, making 2024 a pivotal year for the global cryptocurrency market.

The US elections may change the shape of cryptocurrency regulations

The political landscape in the United States is undergoing significant changes that could have potential consequences for the cryptocurrency market.

Both former President Donald Trump and current President Joe Biden have adjusted their stance on cryptocurrencies, which could dramatically impact the future of the market.

The Trump campaign recently began accepting donations in a variety of cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and US Dollar Coin (USDC), as well as smaller coins such as Shiba Inu (SHIB) and Dogecoin (DOGE).

The move appears to be aimed at young male voters, who are increasingly investing in digital assets. Trump has previously shown support for cryptocurrencies, raising millions through his Trump Digital Trading Cards NFT projects.

In contrast, the Biden administration is signaling a potential change in its approach to cryptocurrency regulation. The recent approval of a spot ETF by the Securities and Exchange Commission (SEC) indicates a more favorable stance towards digital assets.

The change could bring the administration closer to the crypto community ahead of the November election. However, Biden remains focused on consumer protection and financial stability, which will likely lead to strict regulations.

“The SEC’s approval of the spot ETF suggests a strategic pivot,” says Tim Delhaes, Grindery’s CEO.

“This could mean a softer regulatory environment for cryptocurrencies under the Biden administration.”

Crypto’s Minor Role in India’s 2024 Elections

In India, where the population exceeds 1.4 billion, the importance of cryptocurrencies in the upcoming elections is minimal.

The country, which has 93.5 million cryptocurrency owners (6.55% of the population), has seen significant regulatory measures under Prime Minister Narendra Modi.

These include a 30% tax on profits from the sale of digital assets, no offsetting of losses, and a 1% withholding tax on each transaction.

Despite these measures, cryptocurrencies remain a niche issue among Indian voters.

More pressing economic and social concerns overshadow the digital asset debate. For example, the BJP manifesto focuses on educating seniors about digital fraud and countering threats to digital sovereignty.

The Indian National Congress (INC) is emphasizing on digital agricultural transaction ledgers and tackling cybersecurity issues in financial infrastructure.

Balaji Srihari, business director of CoinSwitch, told Invezz:

We believe the government’s approach to taxing cryptocurrencies is part of a broader effort to protect investors and ensure the stability of the financial system. Given the history of the crypto ecosystem, such cautious policy measures are understandable.

UK election delays cryptocurrency legislation

The UK crypto landscape is also influenced by political developments. Prime Minister Rishi Sunak’s call for a July 4 general election has delayed the introduction of new cryptocurrency regulations, delaying long-awaited regulation by at least six months.

The delay comes as other regions, including the European Union, Dubai and Hong Kong, are accelerating their cryptocurrency regulatory frameworks.

Ian Taylor, an advisor to the board of trade body CryptoUK, expressed concerns about the delay.

It’s really a net result because we are laggards. First we lag behind the rest of Europe and then behind other jurisdictions in Asia and the Middle East.

Despite these short-term delays, the long-term growth of the UK crypto industry, supported by a global financial center and strong investment capital, remains promising.

Both major political parties have committed to making the UK a hub for digital financial services.

Global implications of cryptocurrency regulations

The upcoming elections in these major economies will significantly impact the future of cryptocurrency regulation around the world.

In the US, the outcome of the presidential election may determine the pace and nature of cryptocurrency regulation, influencing international standards.

If Biden wins, expect the current regulatory approach to continue. If Trump wins, the focus could shift, affecting the pace of international crypto regulation.

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