A legal expert discusses how the US political climate could redefine cryptocurrency regulation

Crypto.news recently spoke with Bing Wang, Chief Legal Officer at BasedVC, who shared his views on the political rise of cryptocurrencies and upcoming regulatory changes.

As the 2024 US elections approach, the political landscape around cryptocurrencies is undergoing major changes.

Surprising alliances are forming in Congress, and crypto-friendly legislation is gaining bipartisan support. Key figures like Chuck Schumer and former House Speaker Nancy Pelosi, who have traditionally held opposing views, are now emerging as unlikely allies.

The Biden administration has begun to show a newfound openness on crypto policy, suggesting that skeptics like Senator Elizabeth Warren may soon find themselves isolated.

On the Republican side, former President Donald Trump has stepped up his support for the cryptocurrency community, pledging to protect digital asset traders and accepting cryptocurrency campaign contributions.

It’s quite clear that the role of cryptocurrencies is expected to be a key issue this year, something that could shape the future regulatory landscape for the emerging sector.

Wang believes this change in political dynamics will accelerate mainstream adoption and integration of cryptocurrencies in the US

How significant do you think the role of cryptocurrencies will be in the 2024 US elections?

Crypto has always been important in American politics. The famous case of Sam Bankman-Fried and FTX forced him to donate cryptocurrencies to US midterm candidates. However, the impact of the upcoming 2024 elections will be enormous. As Congress passed cryptocurrency-friendly legislation over the past three weeks, Democrats and Republicans alike are leaning toward even greater use of cryptocurrencies. The election program will mention cryptocurrencies, and the key topic of conversation will be positive sentiment towards them.

The Biden administration has demonstrated a shift in its stance on cryptocurrencies, as evidenced by its approval of spot Ether ETFs and collaboration with cryptocurrency industry experts. What impact might these changes have on the cryptocurrency sector, and do you think they will address the concerns of cryptocurrency enthusiasts who have been critical of the administration’s previous policies?

The Biden administration’s sudden change in stance is a huge moment in crypto. Some people accuse this as an attempt to deceive the electorate, but that doesn’t matter because it seems to address concerns the industry has long had. The House passed a bill to repeal the Securities and Exchange Commission’s guidance on cryptocurrencies, which has given the regulator a negative grip on the market. If signed into law, the new bill would help overhaul the SEC and CFTC’s oversight of cryptocurrencies and create a streamlined guide to cryptocurrency regulation. This is a big win for the industry.

Given bipartisan support for cryptocurrency-related legislation like the US Blockchain Implementation Act and the FIT21 Act, what specific regulatory changes can the cryptocurrency community expect in the coming years?

Pro-crypto senators are joining forces and an effort is underway to revive previously dying cryptocurrency bills. The Biden campaign has begun discussing digital asset policy with Democratic allies, while Stabenow’s bill to change how the SEC and CFTC share oversight of cryptocurrencies is back on the table. Stablecoin regulations are also being negotiated in the Chamber. There is expected to be a flurry of legislation in the coming years that will attempt to create a clear path for cryptocurrency regulation, which is what most cryptocurrency companies have wanted.

Do you think the government’s collaboration with cryptocurrency industry experts will help improve public understanding and awareness of cryptocurrency technology?

Just as the Senate has tried to reach out to social media companies like Facebook, TikTok and X (formerly Twitter), interested parties need to meet at roundtables to discuss pressing issues. Avoiding meetings with cryptocurrency experts can only prove harmful in the long run. I strongly believe that as conversations continue, this will help increase trust in digital assets.

What are your thoughts on the potential consequences of appointing cryptocurrency-friendly officials to key regulatory positions?

Well, cryptocurrency-friendly officials will generally mean faster decisions and a more positive attitude towards cryptocurrencies by key decision-makers. I don’t see any negative impacts from this move, except that it will help improve policymaking in the crypto space. The anti-cryptography crusades led by uninformed officials will fade over time, and most will have no choice but to join the program.

How might U.S. policy changes impact the growing interest in self-care and privacy in the crypto community?

Policy changes will have a significant impact on how cryptocurrencies impact the cryptocurrency landscape. Greater scrutiny will undermine the privacy features of some cryptocurrencies, as regulators may require a stricter approach to traceability and transparency of transactions. More stringent KYC and AML requirements could be introduced.

What might be the broader implications for cryptographic security and user autonomy?

This could also drive developments in the space space, as better hardware and innovative cryptographic methods may result from regulatory approaches aimed at increasing privacy and security. The downside may be that regulatory action could create a split between the decentralization ideology for which cryptocurrencies are created and the centralized custody services of the traditional financial system.

How do you think regulators will respond to the growing demand for privacy and self-policing in the cryptocurrency community?

Regulators have several options in this regard. First, regulators can undertake educational initiatives to educate the public about the best ways to secure tokens and use privacy-enhancing technologies. Second, startups and crypto companies may be able to test regulatory sandboxes for experimental purposes without fully committing to compliance requirements. This could help test privacy and self-care solutions in supervised settings. Another approach is to strike a balance between privacy and regulation. Regulators may allow privacy features in cryptocurrencies, balancing this with a mandate to enforce controls on illegal activity or terrorist financing.

What impact might increased political activism and organizing in the crypto community, such as the formation of cryptocurrency PACs, have on the legislative process?

Since Coinbase and its major campaign financing partners, Ripple and Andreessen Horowitz, contributed approximately $161 million to the 2024 U.S. elections, the massive obstacle that is the U.S. legislature has begun to change. Crypto-focused PACs are interested in increasing their pro-crypto membership, and that’s exactly what’s happening. There are expected to be more pro-crypto lawmakers than ever in the next Senate and House of Representatives. This can only mean one thing: more crypto-positive laws and regulations.

Could growing government support for cryptocurrencies and blockchain technology trigger a response from the traditional financial sector?

Traditional financial systems already view cryptocurrencies as a threat. With government support, cryptocurrencies could be at the top of the kill list. This can take many forms, including regulatory pressure from lobbying lawmakers, technological resistance by refusing to include cryptocurrencies in their operations, imposing barriers for cryptocurrency companies to conduct business on their platforms, and even PR campaigns to discourage the public to accept cryptocurrencies.