The big winner of the US election has been determined: cryptocurrency

Analysts believe that the cryptocurrency industry will receive a growth catalyst regardless of who enters the White House.

The 2022 cryptocurrency crash is a distant memory, with Bitcoin making a comeback at $73,500, up more than 63% so far this year. Dubious platforms like FTX are gone, while industry lobbying and campaign contributions have become a powerful force in Washington, including $130 million in contributions to congressional and White House campaigns this election cycle.

Next year’s U.S. Congress could be one of the most pro-cryptocurrency Congresses ever, with both Trump and Harris expressing their willingness to help the industry achieve its long-sought goals.

Cryptocurrency companies are optimistic about this. Faryar Shirzad, chief policy officer of Coinbase Global, said: "No matter who wins on November 5, I will remain optimistic about the prospects of the cryptocurrency industry. In areas where the two parties are willing to cooperate, cryptocurrency is an ideal 'candidate'."

Some analysts also believe that this year’s U.S. election could serve as a growth catalyst for Bitcoin and cryptocurrency companies.

SEC Chairman, the "enemy" of cryptocurrency, may be replaced

Hal Goetsch, an analyst at B. Riley Securities, recently wrote in a research report: "From a regulatory perspective, the 2024 election may be one of the most important moments for cryptocurrency." He believes that if Trump wins, he will introduce more measures to support the cryptocurrency industry. Bernstein Research pointed out earlier this year that if Trump wins, the price of Bitcoin may exceed $80,000. If Harris enters the White House, the price of Bitcoin will fall sharply, one of the reasons being that she will be slower to relax regulations.

This year’s election is particularly important for the cryptocurrency industry, as many companies in the industry are in the crosshairs of the U.S. Securities and Exchange Commission (SEC). Although the SEC approved the launch of a Bitcoin ETF, SEC Chairman Gary Gensler has maintained a tough stance on cryptocurrencies.

Over the years, Gensler has opposed the establishment of relevant rules in addition to launching lawsuits and regulatory actions against the cryptocurrency industry. Cryptocurrency company executives said that the SEC should establish rules that provide a clear path for the cryptocurrency industry to not violate the law. The SEC has accused companies such as Coinbase, Kraken and Binance of being unregistered securities exchanges. The proceedings of these lawsuits are currently underway in federal court. These companies say that their operations are completely legal.

If Trump wins, there is a very high probability that Gensler will leave his post. Gensler's term will end in 2026, but based on past experience, SEC chairmen usually resign when the White House changes hands. Even if Gensler chooses to break tradition and continue to serve as SEC chairman, Trump can immediately promote a Republican to serve as SEC chairman after he becomes president.

If Harris wins, Gensler's fate is less clear. Some major Democratic supporters with ties to the cryptocurrency industry, including Mark Cuban and Ripple co-founder Chris Larsen, have pressured the White House and campaign officials to remove Gensler. However, if Harris is elected president, she already has a long list of official appointments that need to be confirmed in the Senate, and removing Gensler would give her another headache.

Kristin Smith, CEO of the Blockchain Association, believes Gensler “will continue to be the biggest risk to the cryptocurrency industry” if Harris is elected president.

Biden has cracked down on the cryptocurrency industry during his presidency, and what Harris is trying to do is change the industry's perception that "Democrats are the enemy," but Trump has expressed his full support for the cryptocurrency industry.

In July, Trump told a major Bitcoin conference that he would "make the United States the cryptocurrency capital of the world" and that the U.S. would begin to reserve Bitcoin for strategic purposes. Trump himself has also dabbled in the cryptocurrency space, helping to launch the World Liberty Financial project.

“The Harris-Biden Administration has stifled innovation with more regulation and higher taxes, but the cryptocurrency industry knows that President Trump is the only candidate in this race ready to encourage American leadership in cryptocurrency and other emerging technologies,” Brian Hughes, a senior adviser to the Trump campaign, said in a statement.

Harris is not as involved in the crypto industry as Trump, but her campaign officials often reach out to executives in the crypto industry, according to people familiar with the matter. In October, Harris launched the Opportunity Agenda project to help black communities get involved in the cryptocurrency field, which includes a project to "support regulatory frameworks for cryptocurrencies and other digital assets."

Cryptocurrency industry becomes the "funder" of the election

The bipartisan green light for cryptocurrencies in the United States is the result of heavy lobbying and donations during this year's election cycle. Political action committees funded by companies such as Coinbase, Ripple Labs and venture capital firm Andreessen Horowitz have spent more than $134 million to support candidates who support cryptocurrencies and attack their opponents.

The cryptocurrency industry has already scored some big wins before the votes were counted. A PAC funded by the industry spent $10 million in the California Democratic Senate primary to support pro-cryptocurrency Rep. Adam Schiff and Rep. Katie Porter. Schiff has a very good chance of winning the deep blue state of California. The PAC also spent heavily to support Democratic primary candidates Emily Randall in Washington state and Shomari Figures in Alabama, both of whom made it to the general election.

The cryptocurrency industry wants Congress to pass two key proposals: one that would set requirements and standards for stablecoins, cryptocurrencies pegged to the U.S. dollar; and another that would isolate most crypto markets from the SEC’s regulatory purview and bring them under the purview of the Commodity Futures Trading Commission, which is seen by the industry as a lighter-touch regulator.

If Trump is elected president, these proposals are more likely to be passed. In May, the U.S. House of Representatives passed a bill drafted by Republicans and supported by Coinbase and other crypto companies that would set rules for cryptocurrency exchanges, many of which would not be subject to securities laws if they were sufficiently decentralized. 71 Democrats joined Republicans in voting against Gensler's proposal, which Gensler said would "undermine decades of precedent." Meanwhile, stablecoin-related legislation has also received bipartisan support.

Even if Harris wins, the legislation is likely to move forward. Smith of the Blockchain Association pointed out that the "lame duck" period of the U.S. Congress from November 5 to January 3 next year is a window of opportunity. During this period, although legislation usually faces greater resistance, senior Democrats and Republicans on the House Financial Services Committee and Senate Majority Leader Chuck Schumer believe that the legislation is expected to be passed this year.

One thing to note is that the cryptocurrency industry may see itself being left out in the cold after the election when politicians stop scrambling to raise donations or win votes and move on to the more difficult task of governance. There will definitely be a "legislative battle" in 2025, and in such an environment, it will be more difficult for proposals from both parties in the United States to be passed.

Which crypto assets are worth paying attention to?

Regulation is just one factor that affects the prices of cryptocurrencies and related stocks. In the medium term, the rise and fall of Bitcoin and mining company stocks often depends on macroeconomic trends, such as how quickly the Federal Reserve cuts interest rates. Trump's victory may boost Bitcoin prices in the days after the election, but election models show that this year's election is too close to call.

Coinbase (COIN) would be one of the beneficiaries if the regulatory environment eases, and Mizuho Securities believes the company's stock price would get a boost if Gensler is replaced by a more crypto-friendly SEC head.

However, some analysts have advised investors to wait until the election dust settles.

"We expect shares to remain range-bound until the election results are determined, regulatory clarity emerges, or a better catalyst emerges that could provide sustained growth to Coinbase's profits," said B. Riley Securities' Gotch. Gotch has a "neutral" rating on Coinbase shares with a $185 price target, about 16% below current levels.