Crypto investors are closely monitoring the upcoming US presidential election, anticipating significant regulatory changes that could reshape the industry. The political climate around digital assets is improving, highlighted by recent swift approvals and legislative advancements.
In May, the market saw a surge in confidence with the approval of spot Ether exchange-traded funds, boosting investor optimism from a mere 6% to nearly 100% in just two weeks. This shift was further supported by the House of Representatives passing the 21st Century Act (FIT21), a bipartisan bill aimed at clarifying regulatory roles for digital assets.
However, the industry still faces challenges. Prolonged regulatory uncertainty has driven many blockchain businesses overseas. Cosmo Jiang, managing partner at Pantera Capital, expressed concern over losing talented entrepreneurs due to unclear regulations. He noted, “Many entrepreneurs within our network have moved overseas, taking their valuable ideas with them.”
Consensys, the company behind the MetaMask wallet, recently faced allegations from the SEC of operating as an unregistered broker. This case underscores the ongoing regulatory confusion, with Consensys arguing that the SEC lacks authority over software interfaces like MetaMask.
Carlos Pereira, partner at Bitkraft Ventures, acknowledged positive developments but warned of remaining obstacles. He highlighted that while crypto is gaining positive attention in political campaigns, there are still differences in the extent of support across party lines. “Different election outcomes can lead to varied consequences,” Pereira noted.
Despite uncertainties, venture firms are not crafting contingency plans. Instead, they focus on emerging business trends and the integration of technologies like AI and blockchain. Pereira emphasized the potential impact of the election on the speed and extent of regulatory changes, particularly the passage of the FIT21 bill.
The FIT21 bill could redefine how digital assets are regulated, potentially placing them under the Commodity Futures Trading Commission’s jurisdiction or the SEC’s oversight. Pantera’s Jiang sees this bill as a crucial step toward a regulatory framework that allows blockchain businesses to use tokens effectively.
While the Senate’s review of the FIT21 bill may take months, SEC Chair Gary Gensler has already criticized it for potentially creating new regulatory gaps. The outcome of the election will likely influence the future regulatory environment for crypto in the US, making it a pivotal moment for the industry.
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