Election Edge: Navigating the Gold, Energy and Crypto Markets as Voting Day Approaches
Table of Contents
Trump vs. Harris: How Could the US Election Affect the Gold Price?
WGC Report: Demand for Gold Bars, Coins Higher Under Democrat Leadership
Trump Presidency: A Threat to EV Growth and Battery Supply Chain Expansion?
How Will the US Election Affect the Crypto Industry?
Trump vs. Harris: How Could the US Election Affect the Gold Price?
The much-discussed US election is quickly approaching, and in the wake of President Joe Biden’s decision to drop out of the race, Vice President Kamala Harris will take on former President Donald Trump on November 5.
In the resource sector, market participants are starting to wonder how the presidential race may affect the gold price. While diverse factors drive the gold price, the US — and by extension its leader — impacts many of them, including the global geopolitical environment, interest rates and the performance of the US dollar.
In 2020, Biden and Harris presented themselves as a team who would bring Republicans and Democrats together, challenging Trump’s divisive and populist rhetoric of making America great again. Although Trump ultimately lost that election, his popularity remained steadfast among his base.
During their terms, both the Trump/Pence and the Biden/Harris administrations have increased domestic oil production and increased tariffs on goods from overseas.
During the first debate between Harris and Trump, which took place on September 10, 2024, Harris focused on her platform’s key economic policies, including increased support for first-time home buyers, families and small businesses. She was also committed to investing in diverse forms of energy, including renewables and oil and gas, to reduce dependence on foreign oil.
Meanwhile, Trump maintained a focus on the key issues of his base including policing and immigration, but also discussed his economic plan that would see continued economic pressures on trade with China by increasing tariffs.
When it came to the conflict between Russia and Ukraine, Harris pledged her support for both Ukraine and other US allies in Europe. While Trump did not say he supported Ukraine, he said he was also committed to ending the war, and planned to push Ukrainian funding to European partners while attempting to bring Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to the negotiating table.
The gold price has climbed significantly under both administrations. It is currently holding at historic levels around the US$2,500 mark, more than double its price when Trump took office in 2017. Interest rates are expected to see cuts following a Federal Open Markets Committee meeting on September 17 and 18, which could give gold a further boost in the run-up to election day.
How does gold typically perform post-election, and how has it moved during Trump and Biden’s presidencies? While the past doesn’t necessarily dictate the future, reviewing gold price trends can help investors plan their election strategy.
How do US elections affect the gold price?
Looking at past US elections can provide insight on how the gold price may move in the days and weeks following November 5. However, on a broad scale, changes post-election tend to normalize fairly quickly.
In an email to the Investing News Network, Lobo Tiggre, CEO of IndependentSpeculator.com, said he doesn’t see either candidate having a large effect on the price of gold post-election. “The outcome of the election will have ideological consequences, but it’ll make no difference to gold, silver, uranium or the commodities super-cycle,” he said.
In 2016, when Trump ran against Hillary Clinton, the gold price climbed by about US$50 in the weeks leading up to the November 8 election, peaking at just above US$1,300 per ounce on November 4. Following Trump’s win gold fell substantially, moving as low as US$1,128 in mid-December. Following that low point, the gold price began to rebound, and by the middle of January 2017 was once again above the US$1,200 level.
Gold price, November 1, 2016, to January 30, 2017.
Chart via Trading Economics.
The 2020 election was on November 3, and in the week leading up to the vote gold was trading at around US$1,900, although it fell as low as US$1,867 on October 30. After the election, the gold price performed positively, spiking from US$1,908 on the day of the vote to US$1,951 on November 6.
However, gold fell back down over the following weeks, and dipped briefly below US$1,800 as vote recounts in Georgia and several districts and legal challenges by Trump’s team dragged on.
Gold price, November 1, 2020, to January 30, 2021.
Chart via Trading Economics.
Gold began to climb again in December ahead of January 6, 2021, when the electoral college met to formalize Biden’s victory. That day, the attack on the US Capitol building, which aimed to stop this process, caused the gold price to plunge from US$1,949 on January 5 to US$1,848 by January 8. The events of January 6 were the start of a decline in the gold price that continued until March 8, when gold bottomed out at US$1,674.80.
Gold’s behavior at this time went against the usual trend whereby it performs well amid crisis and turmoil; the decline may been a reaction to the successful affirmation of Biden. Stock markets also reacted opposite to expectations, seeing strong gains on January 6 and 7 as investors and Wall Street believed an economic recovery was in sight.
How did the gold price perform when Trump was president?
The gold price rose substantially during Trump’s presidency, increasing from US$1,209 when he assumed office on January 20, 2017, to US$1,839 on his final day, which was January 19, 2021.
While these gains can’t be directly attributed to Trump, his actions helped shape the geopolitical landscape both in the US and abroad. During his tenure, trade wars with both allies and competitors were in focus.
China was a key target for Trump. While tariffs on Chinese goods were already in place, his administration applied new restrictions to more items, including steel, electric vehicle batteries and consumer goods. Also under Trump’s watch, relations with India fractured and the country lost its preferential trade status with the US. He also withdrew from the Iran nuclear treaty and imposed punishments on anyone who traded with Iran.
These and other “America First” protectionist policies and sanctions implemented by the Trump administration tarnished the image of the US as a reliable trade partner, helping to push the BRICS nations — Brazil, Russia, India, China and South Africa — away from the US dollar as a global reserve currency.
The BRICS have since expanded to include Iran, Egypt, Ethiopia and other emerging nations, and have increasingly turned toward gold. China and India in particular have increased purchases of gold through their central banks, leading some to speculate that they are attempting to create a new currency that is at least partially backed by gold.
One other factor that drove the gold price during Trump’s term was the outbreak of the COVID-19 pandemic and government policies put in place to support citizens and the economy. For example, the former president oversaw multiple stimulus efforts, including packages announced in March 2020 and December 2020. These actions led many to turn to gold as a safe haven out of concern for a weakening US dollar.
A second Trump term would likely bring more of the same protectionist policies. Indeed, his 2024 campaign has similarities to his 2016 and 2020 campaigns. He has reused his “America First” rhetoric and promised a fresh round of tariffs if elected. Singling out China, Trump has said he would look to implement a 60 percent tariff on all goods imported into the US, a move that would likely increase tensions and the likelihood of a widening division between the countries.
How has the gold price performed with Biden and Harris in office?
Gold has also seen sizable gains during Biden’s presidency. The price of gold was US$1,871 when he took over from Trump on January 20, 2021. And while Biden’s term as president is not over for another five months, as of July 23, the gold price was trading at about US$2,409. It reached a new record on July 17 of US$2,474.
Again, it’s hard to say how many of the Biden administration’s policies directly influenced these gains. Geopolitical conflict and black swan events outside of his control all affected the gold market during this time.
For example, Biden and Harris entered office one year after the start of the COVID-19 pandemic. Inflation was ballooning, which typically leads to higher gold prices. The US Federal Reserve has worked to counteract inflation and strengthen the US dollar by raising interest rates beginning in 2022, a move that tempered the gold price for a time.
Biden came into office on a promise of restoring the US’ place in the global community, and while his administration did close rifts among important trading partners like Canada and the EU, tensions with China remain. This rift is a holdover from the Trump administration’s more isolationist policies, but has also been representative of a more competitive global trade landscape as the BRICS nations seek to move away from the US dollar and America’s influence on world economics.
Biden has attempted to at least partially mend the US’ relationship with China, including by meeting with President Xi Jinping in the summer of 2023. However, a key sticking point in negotiations between the two has been Biden’s continued stance that the US would support Taiwan if China were to invade it; at the same time, he has said that the US does not support Taiwan’s independence. Both of these stances are in line with the US’ longtime position on the matter, but escalating tensions between China and Taiwan have brought this to the forefront.
Harris is unlikely to shift policy when it comes to Taiwan. In a September 2022 meeting with South Korean President Yoon Suk Yeol, she said the US was committed to opposing unilateral actions by China and would maintain the status quo in the South China Sea. The White House added that peace and stability across the Taiwan Strait was essential to a free Indo-Pacific region.
Harris discussed trade routes in the region again when she attended the ASEAN summit in Jakarta, Indonesia, in September of 2023. She told CBS’s Margaret Brennan that it’s not about pulling out of Southeast Asia, but about de-risking the region and ensuring that American interests were protected.
On an economic level, the Biden administration has distanced itself from China with policies such as the Inflation Reduction Act and Chips Act, which support the development of western supply chains for a variety of industries, including clean energy, electric vehicles and semiconductor chips, in part by introducing subsidies for companies that don’t rely on China for their supply chain.
Meanwhile, China has accelerated its de-dollarization efforts, dumping roughly US$50 billion worth of US Treasuries and agency bonds during the first quarter of this year.
Additionally, Biden’s role in implementing a strict set of sanctions against Russia following its invasion of Ukraine in February 2022 deepened a divide between the US and Russia, as well as the other BRICS nations.
Among other sanctions, the US limited Russia’s access to SWIFT, a communications network that helps facilitate the global movement of funds. The US Department of the Treasury also implemented controls that effectively cut off Russia’s central bank and key funds and personnel from accessing the US financial system. Some analysts believe the move may work to undermine the US dollar as the global reserve currency in the long term, as it sent a signal to the rest of the world that the US is willing to effectively weaponize the US dollar.
Watch post-election Fed meeting
Though this year’s presidential election may have a limited effect on the price of gold, a rate decision by the Fed may impact the metal’s price. Decisions made by the US central bank, which is not controlled by the president, have a strong impact on the US dollar and thus often impact the gold price as well.
The Federal Open Market Committee, which is the board that ultimately decides whether to increase or decrease interest rates, is set to meet from November 6 to 7, just one day after the November 5 election.
After strong expectations for cuts at the beginning of 2024 didn’t pan out, with the Fed still holding rates steady as of July, market participants now expect the Fed to make its first reduction in September.
Gold tends to rise when rates are lower and fall when they are high, but this year gold has reached all-time highs in the face of elevated rates. A post-election rate cut could boost gold further, but with a Fed meetings still to come in September, it’s not yet clear how the November meeting will play out.
Investor takeaway
Historically speaking, returns for gold under Democrat and Republican presidents have averaged 11.2 percent and 10.2 percent, respectively. But that might not be the data point investors should focus on.
Which party controls Congress, which is comprised of the House and Senate, has had a far stronger influence on the gold price. Under Democrat-controlled Congresses, gold has averaged a 20.9 percent gain, compared to just 3.9 percent when Congress is controlled by Republicans. In cases where neither controls Congress, gold has averaged 3.5 percent.
With that in mind, investors should consider the effects of policies enacted not only by the executive branch of the US government, but also by Congress and the Senate. Those hoping to use the immediate aftermath of the election outcome to their advantage should also proceed with caution — when it comes to gold, past elections haven’t provided great investment opportunities, with losses and gains typically being short-lived.
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Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
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WGC Report: Demand for Gold Bars, Coins Higher Under Democrat Leadership
A recent report from the World Gold Council (WGC) notes that US gold bar and coin demand has been higher on average during Democratic presidencies.
The data, which draws from the last 37 years, shows that monthly demand in the first year following a Democratic win averages 79,000 ounces of gold, while the average following a Republican win is 32,500 gold ounces.
The WGC report suggests that retail investors’ demand for gold bars and coins is partly driven by their perceptions of economic policies when a Democrat is in office.
These views include the likelihood of administrations to implement policies that could lead to economic instability or higher inflation, prompting them to seek the safety of tangible assets like gold.
However, this does not necessarily mean gold prices follow the same trend. While the report notes a possible correlation, this behavior is not uniformly observed in other types of gold investments, such as ETFs or central bank purchases, showing the complexity of predicting gold prices based on political outcomes alone.
Instead, the report emphasizes the enduring role of geopolitical risk in gold’s performance.
A 100 basis point rise in the Geopolitical Risk (GPR) Index has an approximate 2.5 percent positive impact on gold’s return, according to WGC data, reinforcing gold’s status as a safe haven during times of elevated geopolitical tension.
The GPR Index is constructed using automated text analysis of national and international newspapers, counting the number of articles discussing geopolitical tensions, wars and other forms of political unrest.
The index provides a quantitative measure of geopolitical risk, allowing investors to gauge how such events might influence asset prices, including gold.
Recent geopolitical incidents, such as the attempted assassination of former President Donald Trump and President Joe Biden’s decision not to seek re-election, have had significant impacts on global financial markets.
The attempted assassination of Trump at a rally in Pennsylvania, where he sustained a minor wound, led to a surge in gold prices and Bitcoin prices over the following days.
This incident underscores how sudden geopolitical events can influence investor behavior and drive demand for safe-haven assets, even if the broader trend does not directly correlate with political party dynamics.
The WGC report concludes that while US presidential elections and the resulting administrations do impact investor perceptions and behaviors, these factors are part of a broader array of influences on gold prices. The increase in gold bar and coin demand during Democratic presidencies suggests that retail investors are reacting to perceived economic threats rather than the political party itself.
Thus, predicting gold prices based on political events alone is inherently complex, as investor behavior is influenced by a multitude of factors beyond just the party in power.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
Trump Presidency: A Threat to EV Growth and Battery Supply Chain Expansion?
Electric vehicles (EVs) are key to cutting greenhouse gas emissions and fighting climate change, and the Biden administration has implemented subsidies and tax incentives to foster US and North American supply chains.
Nearly US$1 trillion is flowing into various initiatives via the Bipartisan Infrastructure Deal, CHIPS and Science Act and Inflation Reduction Act (IRA). The aim is to boost economic and tech development while supporting clean energy.
More specifically, the Bipartisan Infrastructure Deal invests in upgrading US infrastructure, including roads, bridges, public transit, and broadband internet. Meanwhile, the CHIPS and Science Act promotes US semiconductor manufacturing and research to reduce reliance on foreign suppliers, and the Inflation Reduction Act focuses on reducing the deficit, lowering drug costs and investing in clean energy to combat climate change.
On the EV side, US$2 billion in funding is being directed toward the Department of Energy to provide grants for domestic production of various types of clean vehicles, from hybrids to hydrogen fuel cell cars. There are also critical minerals manufacturing subsidies and several consumer incentives, including a US$7,500 tax credit on new EV purchases.
How would a Trump presidency impact the EV sector?
As the US election approaches, with Republican candidate Donald Trump set to square off against Democrat Kamala Harris on November 5, speculation is rife about whether Trump would end EV incentives.
In an August 20 interview with Reuters, the presidential candidate expressed his disdain for tax incentives.
“Tax credits and tax incentives are not generally a very good thing,” he said.
“I’m not making any final decisions on (EV tax credits). I’m a big fan of electric cars, but I’m a fan of gasoline-propelled cars, and also hybrids and whatever else happens to come along.”
However, battery sector experts at Fastmarkets’ Lithium Supply and Battery Raw Materials conference agreed it would be extremely difficult for Trump to repeal any or all of the three initiatives.
“What can Trump legally change if he becomes president with the IRA?” Grace Asenov, base metals and energy editor at Fastmarkets asked rhetorically during her presentation at the event. “The quick answer is he is not going to be able to change very much. The IRA is law; anything that the treasury department does through regulation can be changed, but it would take a lot of time, and it would have to be done in a legally defensible way,” she added.
Even so, analysts at the Fastmarkets event believe that even changing the IRA and other legislation would be difficult, a Trump presidency would have a negative impact on EV sector growth. During a scenario analysis, they concluded that another Trump term could have three major implications for EV battery-related policies.
First, Trump may impose stricter regulations on which EV models qualify for subsidies under the IRA, limiting eligibility for the US$7,500 tax credit. Second, his administration could eliminate Environmental Protection Agency vehicle emission standards that are expected to lead to 67 percent of vehicles being electric by 2032.
And lastly, Trump might roll back commitments for 50 percent of the government fleet to be electric by 2030.
“If implemented, these changes could result in 5 percent lower EV sales by 2034,” said Asenov.
Will Trump move to compete with China on EVs?
Although Trump has ridiculed EVs in the past, a friendly relationship with Tesla ( NASDAQ:TSLA) CEO Elon Musk, along with recent positive comments about EVs, show that he may be warming to the concept.
If he wants to see the EV and battery supply chain grow in the US, Trump may implement stronger restrictions on Foreign Entity of Concern nations, including China, which dominates the processing of lithium, rare earths and several other critical minerals. China is also the top producer of rare earths and other important commodities.
“He could say, ‘We don’t want to rely on China at all (for critical minerals and battery processing and manufacturing),’” said Asenov, noting that such a decision would slow EV adoption.
Trump’s aversion to Chinese reliance was also brought up during a panel discussion at the Fastmarkets event.
“I don’t think he wants to lose to China on the manufacturing of EVs,” said Howard Klein, cofounder and partner at RK Equity. “I’m relatively optimistic that whoever wins will not make major changes,” he added, noting that southern states have benefited from the subsidies — the same states where Trump has a large base.
Does the IRA need to change?
With the outcome of the US election still very much up in the air, the Fastmarkets experts spent time sharing ideas on how the IRA and other legislation in the country could be changed for the better.
Steve LeVine, editor of the Electric, would like to see some collaborative measures implemented.
“Who’s the world expert in making batteries and making the chemicals, making the components? It is the Chinese. So if I were to change any part of the IRA, it would be an incentive to bring Chinese expertise into the US to teach Americans how to do that,” he told attendees at the Fastmarkets event.
Asenov noted that Trump could look to close the US$7,500 credit loophole for leased vehicles through which consumers can lease an EV, get the incentive and then return the car after three years.
For his part, Klein said he would like to see more investment in mineral extraction and production.
“More money for mining. There is a lot of funding in the IRA, but no money for mining, just processing,” he said.
Klein went on to note that allocating money for mining could “change the mentality” around the sector and send a positive message to the public about the often-maligned industry. Whether added to the IRA or adopted as standalone investment, the need to secure new and grow existing mined supply is a crucial first step in EV sector growth.
Indeed, the International Energy Agency notes that demand for minerals used in EVs and battery storage is set to grow at least 30 times by 2040 in climate-driven scenarios.
While investment in new mine supply, processing and manufacturing were agreed to be imperative, where that money comes from caused some division amongst the panelists.
As Klein called for IRA funding, David Deckelbaum, analyst at TD Cowe,n took a more “cynical view” of the IRA.
“I don’t think (the IRA is) very pragmatic,” he said. “My criticism would be, especially as you look at the capital flows and attracting capital and investments, investors do not want to invest in something that requires infinite supplementation.”
Deckelbaum went on to explain that he agreed with LeVine’s point, and suggested removing China from the “economy of concern” list to allow materials from China to qualify for investment tax credits.
This would also involve increasing consumer credits and eliminating income limits to boost adoption.
“We should focus on creating demand domestically, rather than imposing restrictions on how manufacturers meet it. Since it’s not feasible to avoid buying materials from China, and investors are reluctant to support companies that can’t compete without government aid, the current approach isn’t sustainable,” he said.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
How Will the US Election Affect the Crypto Industry?
As the world continues to embrace digital currencies and blockchain technology, the cryptocurrency industry is solidifying its position on a broad scale as a key part of the global economy.
Six months in, 2024 has already been a big year for crypto, with milestones including a new all-time high for the Bitcoin price, and the approval of spot Bitcoin and Ether exchange-traded funds in the US.
Heading into the second half of the year, the US election is expected to have far-reaching implications for the crypto market in America and potentially beyond. Issues such as regulation, taxation and the integration of cryptocurrencies into the mainstream economy will be critical in shaping the future of this dynamic sector.
The stakes are high for crypto market participants who want to secure their interests in a rapidly evolving financial landscape. Perhaps unsurprisingly, this burgeoning industry has already become a major talking point in the US election cycle as crypto-friendly Congressional nominees and a favorable regulatory framework become a focus for voters.
A recent article by Coinbase examines the influence Gen Z and Millennial voters will have on this year’s election results. Voters from the two generations make up 40 percent of all eligible voters in 2024, and by 2028, they will account for more than half of the voting population. Research commissioned by Coinbase found that 51 percent of respondents from those generations would likely support candidates that support crypto-friendly policies.
As the crypto narrative continues to intertwine with the US election cycle, the choices made in the voting booth could well determine the trajectory of this transformative technology. The stage is set for a pivotal moment in the crypto industry’s history, and the decisions made in the next few months will echo far into the future of finance.
How is the crypto sector influencing the US election?
While the US election is set to impact the crypto market, the reverse is also true — the industry is already influencing lawmakers at both the federal and state levels as voting day approaches.
In December 2023, in order to gain a toehold in the political sphere, a group of three affiliated super political action committees (PACs) backed by prominent figures in the crypto sphere revealed plans to invest a substantial US$78 million with the aim of supporting crypto-friendly candidates in upcoming political campaigns.
Fairshake, one of the group’s three affiliated super PACs, has now raised upwards of US$203 million through donations from major stakeholders, including significant contributions from the Winklevoss twins and companies such as Kraken, Coinbase (NASDAQ:COIN) and Electric Capital Partners. The group reportedly spent around US$10 million on attack ads in an attempt to sway voters against Representative Katie Porter (D-CA) in the race to represent California in the Senate. Porter, who has been outspoken against corporate interests and federal lobbyists, ultimately lost the race.
In January, CNBC reported on lobbying efforts by the Cedar Innovation Foundation, whose backers are unknown. Its aim was to unseat Senate Banking Chairman Sherrod Brown (D-OH) — a crypto cynic. Brown later supported stablecoin legislation tied to a package that included cannabis banking reform, which he has called a “high priority,” but emphasized that crypto bills must have guardrails and consumer protection to secure his vote.
Since President Joe Biden announced his withdrawal from the US Presidential race on July 21, the crypto industry has been thrust into a new political landscape. Managing Editor for Global Policy and Regulation at CoinDesk Nikhilesh De reported that sources told CoinDesk that Vice President Kamala Harris taking over the campaign will serve as a reset for the Democratic stance on cryptocurrency. Twenty-eight Democrats sent a letter to Democratic National Committee Chairman Jaime Harrison on July 26, calling for a “forward-looking approach to digital assets and blockchain technology.”
How is crypto currently regulated in the US?
The regulatory landscape for the crypto industry in the US is still evolving, and further developments are expected to occur in the coming years. As it stands, various government agencies employ diverse strategies to regulate different aspects of the industry, reflecting their unique mandates and objectives.
The US Securities and Exchange Commission (SEC) is the primary regulator of securities in the US and, under Chairman Gary Gensler, who was appointed by President Joe Biden, it has taken the view that many cryptocurrencies constitute securities and are therefore subject to federal securities laws.
The Commodity Futures Trading Commission (CFTC) is the primary regulator of futures and options contracts in the US. It is of the opinion that certain cryptocurrencies, such as Bitcoin and Ethereum, are commodities due to their decentralized nature and the fact that they are not backed by a government or other central authority.
Both regulators have taken action against crypto exchanges for breaking laws. Most notably, the CFTC brought charges against Binance founder Changpeng Zhao for violating the Commodity Exchange Act in March 2023. Meanwhile, the SEC has been involved in litigation against numerous crypto companies for years.
Majority party split on crypto regulation
Democrats appear divided on the best approach to crypto regulation. While some have cited concerns that overregulation could stifle innovation, other representatives, like Senator Elizabeth Warren (D-MA), have advocated for more stringent policies, citing threats to national security without proper money-laundering provisions in place.
That division became evident when a resolution to overturn the SEC’s Staff Accounting Bulletin 121 (SAB-121) passed in the House in early May. The resolution, which requires firms that provide custody for crypto assets to record them as liabilities, was primarily backed by Republicans, who argued it would reduce regulatory burdens, enable crypto innovation and challenge the SEC’s evolving guidance on digital asset custody. Opponents said reversing the order would undermine the SEC’s authority, which put the measure in place to protect consumers and investors from fraud.
Despite Biden’s opposition to the resolution and his promise to veto the decision, 11 Democratic senators crossed party lines to vote in favor, including Senate Majority Leader Chuck Schumer. His vote to repeal SAB-121 may have been motivated by Republican nominee Donald Trump’s recent support of crypto-friendly policies, which has put pressure on Democrats to reconsider their positions on crypto regulation to avoid losing votes from the crypto crowd.
Biden did ultimately veto SAB-121, but the split among Democrats, as well as the SEC’s recent approval of spot Bitcoin and Ether exchange-traded funds, and the passing of three crypto-related bills, has led some analysts to suggest that the party may be easing its approach to appease pro-crypto voters and gain the support of the crypto-backed super PACs.
Key US crypto legislation to watch
With cryptocurrencies becoming more mainstream, US lawmakers have been strongly encouraged to create a clear and comprehensive regulatory framework for this rapidly evolving industry.
FIT21 Act
The Financial Innovation and Technology for the 21st Century Act (FIT21) is the first federal bill specifically focused on cryptocurrencies to pass one chamber of Congress. It provides a comprehensive and clear regulatory framework, giving the CFTC greater regulatory authority for digital assets over the SEC.
Ranking members of the Democratic Party said they would not whip Democrat votes against FIT21 despite the party’s belief that it creates uncertainty and undermines established legal precedents in its current form. FIT21 received “overwhelming bipartisan support” in the House on May 22, passing with a vote of 279 to 136.
Former House Speaker Nancy Pelosi was one of the votes in favor of FIT21. When she was speaker, she accepted donations on behalf of the House Majority PAC from ex-crypto king Sam Bankman-Fried before his arrest in 2022. Sources for the American Prospect confirmed she was considering the motion days before the vote took place.
Some lawmakers are urging Congress to hold a Senate vote for FIT21 ahead of the November election, although this has been opposed by the president and the SEC.
Responsible Financial Innovation Act
For opponents, the Responsible Financial Innovation Act offers an alternative approach. The bill was a bipartisan effort that was reintroduced by Senators Cynthia Lummis (R-WYO) and Kirsten Gillibrand (D-NY) in July 2023. It has since been referred to the Committee on Banking, Housing and Urban Affairs.
The Act is similar to FIT21; however, there are also some differences between the two bills in terms of their specific provisions and approaches. For example, FIT21 places a greater emphasis on defining key terms and providing exemptions from duplicative regulations, while the Responsible Financial Innovation Act focuses more on consumer protection and combating illicit finance, goals that align with statements made by the White House.
Digital Asset Anti-Money Laundering Act
While the Responsible Financial Innovation Act seeks to provide a comprehensive framework for regulating digital assets, the Digital Asset Anti-Money Laundering Act aims to address concerns around money laundering and illicit finance in the digital asset space. The bill has 19 sponsors, including Republicans Lindsey Graham (R-SC) and Roger Marshall (R-KS), as well as Warren, a longtime political ally to the current president.
What does Harris think about crypto?
The Democrat’s presidential nominee is Kamala Harris, who is currently serving in the Biden administration as Vice President. This section will discuss Harris’ own positions on crypto alongside those of the Biden administration.
There has been heightened government engagement with the crypto sector under the Biden administration. He has been carefully navigating the crypto industry, aiming to balance innovation and economic growth with consumer protection and regulatory oversight.
In March 2022, Biden signed an executive order outlining a strategy to assess the risks and benefits of cryptocurrencies. It focused on six key areas, including consumer protection, responsible innovation and global competitiveness. The order also addressed the lack of coordination between government agencies by promoting a more unified approach.
Building on this move, the White House released a more detailed framework for responsible digital asset development in September 2022. It expanded upon the key areas identified in the initial executive order and provided further guidance for a coordinated, government-wide approach to managing the risks and harnessing the benefits of digital assets.
It is currently not known whether a Harris administration would enact the crypto policies laid out in Biden’s 2025 budget proposal, which includes measures that prevent investors from immediately selling and repurchasing digital assets, as well as one that would require more traditional reporting methods for digital asset transactions. The budget also includes an excise tax on electricity used to mine cryptocurrencies, which is expected to generate US$10 billion in revenue in 2025 and over US$42 billion over 10 years.
As discussed earlier, the Democratic Party struggled to maintain a unified approach to cryptocurrencies under the Biden administration. Harris has yet to take an official stance on the issue, and any mention of crypto regulation was noticeably absent from the Democratic Party’s 2024 Platform.
However, crypto Dems have some reasons to be hopeful of a moderate approach. Harris has ties to the tech industry going back to her time as an Attorney General in California in the 2010s, where she was influential in facilitating an agreement on privacy policies.
In early August, Harris was also publicly backed by crypto platform Uphold board member JP Thieriot, and she has reportedly been meeting with industry officials in the weeks leading up to the August 14 online “townhall” event of crypto Democrats, Crypto4Harris, which does not have ties to the official campaign.
What does Trump think about crypto?
In response to the crypto industry’s growing influence in the political sphere, Trump also appears to have shifted toward a supportive stance in recent months. After initial skepticism, his forays into the crypto world include the launch of his second collection of Trump Cards, a non-fungible token (NFT) collection on the Polygon blockchain.
In May, Trump became the first presidential nominee to accept donations in digital currencies, and in June, he advocated on Truth Social for all future Bitcoin mining to be done in the US.
Also in May, Lee Bratcher, founder and president of the Texas Blockchain Council, shared insights with Coindesk on Trump’s interest in crypto, suggesting he may have been influenced by former Republican presidential candidate Vivek Ramaswamy, who was supportive of cryptocurrencies and blockchain technology during his brief campaign.
“Trump looks to Vivek on tech and digital asset policy,” Bratcher said. “When he saw how Vivek captured the Republican voter — and more centrist (voters) than Trump can capture — he’s probably more interested in that (policy).”
Trump appears to be driven by a desire to distinguish himself from political opponents who favor a more active regulatory approach, as well as crypto’s increasing popularity and potential.
In May, he criticized Biden, the Democratic party and Gensler at a dinner for buyers of his NFT cards, telling pro-crypto attendees that they “better vote for Trump” if they want crypto in “any form.”
While he hasn’t explicitly said how he plans to tax digital assets, Trump is a prominent proponent of lower taxes. His administration signed the Tax Cuts and Jobs Act into law in 2017, the largest tax code change made in decades. Provisions within the act are set to expire in 2025, although Trump has said he will make them permanent if he is re-elected. The Congressional Budget Office has estimated that if they become permanent, these tax cuts would deduct billions from the US revenue base annually beginning in 2027.
At a rally in New Jersey in mid-May, Trump promised voters that he would impose further tax cuts, lowering the maximum capital gains tax rate from 20 percent to 15 percent. This would affect crypto assets, as the Internal Revenue Service (IRS) treats cryptocurrencies as property, making transactions subject to capital gains and other taxes.
According to Section 1031 of the tax code, some capital gains taxes can be deferred for like-kind exchanges — in other words, investments that are of the same nature or character, even if they differ in size or value. The IRS concluded in 2021 that only “real property” can qualify for tax deference as like-kind exchanges, excluding swaps of cryptocurrency. However, some attorneys disagree with that classification.
Trump spoke at the 2024 Bitcoin Conference in Nashville on July 27, promising friendly regulations and the creation of a strategic Bitcoin stockpile for the US. A draft of legislation to support a Bitcoin reserve was introduced by Senator Cynthia Lummis (R-Wy) at the event following Trump’s speech. The draft legislation for the reserve fund briefly mentions that it would contribute to reducing the US national debt, but it lacks specific details on how this would be achieved. Trump was notably tight-lipped on the issue during a recent interview with Elon Musk.
It’s worth noting that a special-interest group called Project 2025 has developed a 900 page conservative policy agenda called the Mandate for Leadership that includes strategies to shift the power of the IRS and other agencies toward the executive branch. Additionally, the document recommends that the SEC and the CFTC collaborate to delineate the distinction between digital assets that are classified as securities and those that are considered commodities.
The group was organized by the Heritage Foundation, a conservative think tank that has influenced Republican policies in the past, including during Trump’s presidency.
How did the presidential debate affect Bitcoin?
Trump and Harris battled it out during their first debate last night, September 10 at 9:00 EDT. According to a poll conducted by CNN, 63 percent of debate watchers said that Harris outperformed Trump.
Despite crypto’s influence on the campaign trail as recently as one month ago, neither candidate was asked about cryptocurrency, and neither brought it up. Big Tech and artificial intelligence were largely not touched on as well, apart from a brief quip during heated exchanges involving the economy and foreign policy.
Bitcoin’s price fell quickly early in the debate and continued to retreat throughout it. By the time midnight had hit, Bitcoin’s value had fallen to US$56,802, down 1.46 percent from its price at the start of the debate, which coincided with the opening of day trading in Asia. Just before 11:00 am EDT, its price had fallen a further 2 percent to US$55,573, but it bounced back to nearly US$58,000 by 2:25 p.m.
Investor takeaway
Trump’s statements in recent months suggest a permissive stance toward crypto if he is elected. A Harris administration could be more open and forward-thinking than the cautious approach taken by the current Biden administration, but will likely prioritize careful decision-making.
Most crypto experts advocate for a regulated approach, arguing that increased regulatory efforts have served as an incentive for more serious investors. Indeed, this regulatory push has been a significant catalyst for crypto’s impressive performance over the past seven to eight months. Ultimately, the outcome of the election will have important implications for the future of crypto regulation and the broader crypto industry.
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Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.
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