What does the incoming Biden administration mean for Bitcoin?

By Andrew Hayward & Stephen Graves
Compiled by: Mengyan Finance Editor's Note: Before the article was written and compiled, Biden had not yet been officially sworn in. Biden has now been officially sworn in as the new president of the United States.
The 46th president has some crypto-savvy people around him, though a Biden administration could also bring more regulation.

summary:

1) President-elect Joe Biden does not have a clear stance on Bitcoin, although he says he does not own any.

2) Some of Biden’s cabinet picks are already proficient in encryption technology.

3) Biden may impose more regulation on cryptocurrencies as president, reversing the Trump administration’s mostly hands-off approach.

If you had checked the Twitter account of US presidential candidate Joe Biden on July 15, you would have seen a rather surprising message from the former vice president and now president-elect. Not only did he tweet about Bitcoin, he also offered to “give back to the community” by doubling any amount sent to a designated account within 30 minutes.

However, both the proposal and the tweet were the work of hackers who broke into Biden's account, as well as those of 130 other prominent public figures, including various politicians and celebrities.

The incident did, however, prompt Biden to make his only public statement on Bitcoin to date. The day after Twitter was hacked, Biden's campaign tweeted: "I don't have Bitcoin and I will never ask you to send me Bitcoin. But if you want to raise money to help Trump become president, you can click on this link." However, as expected, this link does not accept Bitcoin, but only US dollars.

In fact, the incoming 46th president has no known stance on Bitcoin or cryptocurrencies. Prior to the July hack, Biden had never tweeted about it, and Decrypt's emails to his campaign seeking his stance did not receive any response. A pro-Biden political action committee, Draft Biden 2016, accepted Bitcoin donations as early as 2015, although Biden ultimately did not run for president and the committee had no official connection with the then-vice president.

Outgoing President Donald Trump has said on Twitter that he is “not a big fan of Bitcoin and other cryptocurrencies,” but he has been largely hands-off when it comes to digital assets as his agencies weigh the impact and role of crypto in their respective fields.

It can be said that in the process of advancing the transition plan, Biden will inevitably have many other issues to deal with resolutely, from the new coronavirus pandemic to the poor economic situation and Trump's actions in domestic and international politics.

However, as the cryptocurrency industry continues to grow and mature in the United States and the world, Biden's term in office could have a significant impact on cryptocurrencies. Here's what Biden's cabinet picks think about cryptocurrencies, as well as the views of several crypto industry leaders interviewed by Decrypt.

Biden's Crypto Cabinet?

Biden's vice president-elect, current U.S. Senator and former California Attorney General Kamala Harris, has not publicly shared her views on Bitcoin and cryptocurrencies. However, her team includes Ryan Montoya, the former chief technology officer of the Sacramento Kings, which is often called the most tech-savvy and crypto-friendly team in the NBA. He is Harris' director of scheduling and advancement, so he is also easily trusted by the vice president.

Beyond that, Harris has also won praise from at least one prominent crypto personality who thinks Harris might develop an interest in Bitcoin. Investor Tim Draper told CoinTelegraph in August that he had seen Harris’s actions in California politics and thought she could eventually understand and see the potential of crypto. “I think she’s got the brains, so she could learn crypto,” Draper said. “If she doesn’t already have a Bitcoin wallet, then we should create one for her.”

Yellen on Bitcoin

Treasury secretary is one of the first key economic posts Biden has filled, and the nominee is former Federal Reserve Chair Janet Yellen. Yellen is known for her combative stance on Bitcoin and cryptocurrencies; in October 2018, she said of Bitcoin: "Let me just say, I'm not a fan." Moreover, a year ago, she also regarded Bitcoin as a "highly speculative asset" while noting that the Federal Reserve plays a small role in cryptocurrencies.

As Treasury Secretary, Yellen will be responsible for setting the government's fiscal policy, which has a greater impact on cryptocurrencies. And she has already taken drastic measures. During her confirmation hearing in January 2020, she considered cryptocurrency "particularly worthy of attention" because it facilitates criminal activities.

She continued: “I think that a lot of cryptocurrencies are being used for illicit financing, at least in a transactional sense. And we really need to look at how we can reduce their use and make sure that money laundering is not happening through those channels.”

Other Biden picks have also taken a more cautious stance on Bitcoin. The president-elect’s choice to head the Securities and Exchange Commission (SEC) is Gary Gensler, the former chairman of the Commodity Futures Trading Commission (CFTC) during the Obama administration, who will advise on addressing Wall Street oversight issues.

In addition, Gensler will bring rich expertise in blockchain and encryption technology to the Biden administration. Previously, he taught a course on the application of Bitcoin and blockchain in the financial field at MIT. In a CoinDesk column written in December last year, he also described Bitcoin as a "catalyst for change", but pointed out that crypto exchanges "have not yet been properly incorporated into the public policy framework" and emphasized that the crypto market is "riddled with scams, fraud, hackers and manipulation."

Increased regulation of cryptocurrencies?

Drew Hinkes, a blockchain-focused attorney at Carlton Fields, explained that the incoming administration will lead to a sharp increase in new appointments to regulatory agencies. "The new administration will likely fill many of the positions at various regulatory agencies that were left vacant by the current administration," he told Decrypt. "This could be a double-edged sword, in that on one hand, it could benefit enforcement. However, it could also facilitate policy development. With more resources, we may see more no-action relief, and more approvals for the issuance of crypto instruments."

Chandan Lodha, co-founder of CoinTracker, noted that Biden’s proposed tax plan would affect cryptocurrency holders with an annual income of $400,000 or more, especially those with an annual income of $1 million or more.

"The Biden administration's tax plan calls for increased taxes on those making $400,000 or more. The most immediate impact on crypto would be for people in this upper income bracket, who could see their ordinary income tax rate increase from 37% to 39.6% (on short-term crypto capital gains), while those earning over $1 million would see all capital gains taxed at 39.6% and the elimination of the step-basis for inherited crypto," Lodha told Decrypt. "Basically, most crypto users would see no difference, but those making over $400,000 would likely see their crypto taxes increase slightly, and those making over $1 million would likely see their crypto taxes increase significantly."

Juan Aja Aguinaco, co-founder of Shyft Network, told Decrypt that Biden's ability to influence cryptocurrencies as president will depend on several factors, including the composition of the Supreme Court. Even so, he believes a Biden administration could still have a positive impact on cryptocurrencies, albeit more interventionist than Trump. In addition, he pointed out that some prominent Democrats would support regulation.

“He might relax the hardline stance taken by the Trump administration,” Aguinaco said. “He might take a more exploratory approach and push for the development of blockchain-based solutions.”

He noted that Democrats historically tend to be more protective of end users, citing Rep. Maxine Waters’ request that Facebook pause the development and deployment of Libra until Congress can better understand the impact on them. “DeFi and its growing volatility could become a target for end-user/investor protection or regulation in the future,” Aguinaco continued.

“Alexandria Ocasio-Cortez is a prominent figure and influence within the party, and she has spoken out against currencies controlled by corporations and in favor of centrally managed currencies. While her speech was more specific to stablecoins, I would not be surprised if Democratic representatives took more of a protective stance rather than sitting on the sidelines.”

In December 2020, three Democratic congressmen, Rashida Tlaib, Stephen Lynch, and Jesús G. "Chuy" García, went a step further and announced the Stablecoin Tethering and Bank Charter Enforcement (STABLE) Act. The bill requires stablecoin issuers to have a bank charter and obtain regulatory approval from the Federal Reserve, the Federal Deposit Insurance Corporation, and other agencies before issuing the coin.

“It is critical and ongoing to lead the way in preventing cryptocurrency providers from repeating the criminal practices of legacy big banks against low- and moderate-income residents of color,” said Congressman Tlaib.

Cautious lobbying on cryptocurrencies

The stablecoin bill is part of a pushback against cryptocurrencies within the Democratic Party. In November 2020, a group of six Democratic representatives (including Tlaib, Lynch, and García) criticized outgoing Acting Comptroller of the Currency Brian Brooks for his "excessive focus on crypto assets and crypto-related financial services," even before stimulus checks from the COVID-19 relief bill reached the hands of Americans.

A month later, Rep. Waters wrote a letter to Biden urging the reversal of some crypto-friendly policies adopted by the Office of the Comptroller of the Currency (OCC). She wrote: “Your appointees to the OCC also cannot assume, as their predecessors did, that the laws Congress passed more than 150 years ago somehow give them the authority to provide national bank charters to non-bank fintech or payment companies.”

During Brooks’ tenure as acting comptroller, the OCC issued guidance that national banks can custody customer crypto assets and said national banks can hold stablecoin reserves for customers. Rep. Waters proposed revoking both policies.

In some ways, then, it’s very similar. Even at the highest levels of government, there’s an ongoing battle between crypto advocates and crypto skeptics. However, the fact that Biden appointees like Gary Gensler have backgrounds in crypto and blockchain suggests that the field has matured a lot since at least the invention of Bitcoin more than a decade ago.