What Crypto Investors Should Expect From A Pro-Crypto Congress #CriptoNews

Crypto has made headlines as the 2024 Presidential Election enters the final hectic stretch, but that has overshadowed the wide-ranging influence that crypto lobbyists and lobbying dollars will have on the next Congress. With over $160 million spent by the crypto industry in the current election cycle, investors and policymakers alike should prepare for a bipartisan influx of crypto-friendly lawmakers across both chambers of Congress. With multiple candidates poised to ascend to seats in the House of Representatives this voting block is set to add a significant voice in support of an industry that been continuously on the defensive under the Biden Administration and SEC chair Gary Gensler.

Interestingly enough the spending by the crypto industry has occurred on a bipartisan basis, including millions of dollars spent at the primary level to ensure pro-crypto candidates appeared on the general election ballot in the first place. Since January 2023 crypto super PACs have funded advertising campaigns involving 67 candidates, including ad campaigns in support of the candidates in question as well as more negative campaigns targeted at opponents of the pro-crypto individual. Given the rapid ascent of the crypto lobbying industry – that although not yet ranked #1 in total dollars spent – has certainly made crypto a talking point and issue of this election cycle from a nearly invisible starting point. Given that, investors and policymakers alike should be aware of what a quantifiably more pro-crypto Congress could mean going forward.

A New SEC Chairperson

One of the few things that politicians on both sides of the aisle can agree upon is that the SEC regime that has been led by Gary Gensler has taken an antagonistic approach to the crypto sector. After a track record of drafting cutting edge regulation in a prior role at the CFTC, as well as developing and delivering courses on blockchain and tokenized assets at MIT, the attitude taken by the chair has been quite the opposite of prior public comments. Whether it be the regulation-by-enforcement tactic taken in the form of multiple lawsuits and legal notices against token issuers and crypto exchanges, or the combative comments made during public appearances the message has been clear. Crypto has been listed and treated as a detriment to public markets rather than the innovative solution it truly represents.

Flush with dollars from crypto super PACs and other lobbyists, the new Congress (and potentially the White House) – will face both pressure and expectations to install a new SEC head. While technically there is no obligation for an incumbent chairperson to resign upon a change in either Congressional or White House leadership that has been the case previously. One thing that crypto investors and advocates should be wary of, however, is that (like under Gensler) even an apparently pro-crypto individual can undertake an aggressive and antagonistic campaign.

Legislation: Stablecoin Or Bitcoin

Another expectation that policymakers and investors should come into 2025 with is that – after years of false starts and seemingly interminable hearings and testimonials – some kind of crypto related legislation is due to be passed into law. While there have been multiple efforts in the past to codify the treatment and classification of stablecoins, there are two primary reasons why the new Congress will more strongly incentivized to do so. First the reality that TradFi institutions across the board have entered into the crypto arena with an array of products and services has made crypto and crypto-adjacent topics more understandable and less frightening for the non-expert consumer. Second is the growing profile of technologies and technology applications – including crypto alongside the red hot AI sector – in every day conversation. Consumers increasingly understand that tools exist that will enable daily transactions and activities to be performed in a more cost and time efficient manner. Consumer interest translates to voter expectations, especially as the private sector continues to innovate and produce solutions.

These facts circle back around the stablecoins, which are the simplest and most understandable on-ramp for both institutions and individuals seeking to gain exposure to the crypto space. Additionally, the Congress will have multiple bills and proposed pieces of legislation from which to iterate, simplifying the process of eventually passing a stablecoin-centered bill.

Wish List Item: Tax Reform

Taxes are never a simple topic to discuss, and are rarely something that gains widespread agreement, but for investors and advocates with a more optimistic outlook, clarifying and simplifying crypto tax treatment is a good place to start. Even if Congress is able pass, and the White House signs into law, a bill that simplifies and standardizes stablecoin treatment (relatively low hanging fruit all things considered), current U.S. tax treatment will continue to stifle adoption and further innovation.

Mirroring the approach used for legislative purposes, advocates seeking crypto tax reform would be well served to focus on targeted exemptions, carve-outs, or other narrow efforts versus a wholesale change in crypto tax treatment. For example, the current IRS exemption for stablecoin transactions that total under $25,000 is a start – and might be sufficient for individual investors, traders, and users, but for entrepreneurs and institutions that is not large enough. Leveraging the pro-crypto Congress to drilldown on this issue might actually deliver quantifiable tax changes that benefit crypto and encourage wider utilization.

Congress looks set to pivot to a pro-crypto stance, and investors should take that into account when looking forward.