Will Biden's White House be friendlier to the cryptocurrency industry?

The crypto community has been paying close attention to the next U.S. presidential election. After all, the final result is likely to have a significant impact on the blockchain and digital currency industry.

In the long run, Joe Biden's election will bring some uncertainty to the regulation of the cryptocurrency industry, especially how some key regulatory agencies led by him will re-enact cryptocurrency policies in the next few years. Although Joe Biden has been cautious about key positions in the next US government, it is reported that he intends to appoint Gary Gensler, former chairman of the Commodity Futures Trading Commission, deputy secretary of the Treasury, partner of Goldman Sachs, professor of MIT Sloan School of Management, and senior advisor of MIT Media Lab Digital Currency Program, to regulate Wall Street and let Federal Reserve Board member Lael Brainard serve as Secretary of the Treasury.

It is worth mentioning that Lael Brainard attaches great importance to the development of the digital dollar. He has previously emphasized that a lot of research and experiments are needed to strengthen his understanding of the opportunities and risks associated with central bank digital currencies. He believes that in terms of central bank digital currency research and policy making, the Federal Reserve must remain at the forefront due to the important role of the US dollar. The Federal Reserve is also continuing to evaluate the opportunities and challenges of digital currencies as a supplement to cash and other payment methods, as well as related use cases, and is also spending time and energy to understand the impact of digital currencies and global central bank digital currencies.

Gary Gensler also seems to be more supportive of the cryptocurrency industry. He wrote a commentary at the end of 2019, "Even if a Thousand Projects Don't Make It, Blockchain Is Still a Change Catalyst." The article pointed out that Gartner, an information technology research and consulting giant, once proposed a so-called "hype cycle" framework to study the adoption stage and market enthusiasm of emerging technologies. Although some people criticized this analytical framework as not scientific enough, it has gradually become popular in all walks of life. Compared with emerging technologies that have appeared in the market in the past, cryptocurrency and blockchain technology have experienced several ups and downs. But it should be noted that market value is only one of the criteria, and the potential viability of emerging technologies cannot be seen from this single indicator. Despite the ups and downs, the crypto community seems to still have high expectations for cryptocurrency and blockchain technology. People hope that this emerging technology can rebound from the trough of disillusionment and are also looking forward to a large-scale outbreak of viable use cases.

According to the latest news, Gary Gensler has confirmed that he will join Joe Biden’s fiscal policy transition team, and four policy experts who are more “friendly” to the cryptocurrency industry have also been shortlisted, including:

1. Simon Johnson: Simon Johnson is an economist and professor at the MIT Sloan School of Management. He is responsible for leading digital currency research and served as a member of the Congressional Budget Office's Economic Advisory Panel from April 2009 to April 2015. He has also written an article specifically on the potential broad impact of blockchain technology on the financial world.

2. Chris Brummer: Chris Brummer is a law professor and director of the Georgetown University Institute for International Economic Law. Chris Brummer is no stranger to the fintech industry because he has testified before the U.S. Congress on Facebook's digital currency Libra. In addition, Chris Brummer was nominated as a commissioner of the U.S. Commodity Futures Trading Commission during Obama's administration, but the nomination was overturned after the 2016 election.

3. Mehrsa Baradaran: Mehrsa Baradaran is a professor at the University of California, Irvine School of Law specializing in banking law. He has previously heard expert testimony on blockchain and cryptocurrency regulatory frameworks before the Senate Banking Committee. He has previously written extensively on the issue of inequality in the banking industry and seems to be very supportive of Libra as he believes that projects like Libra can help expand financial inclusion.

4. Lev Menand: Lev Menand is one of the original creators of the concept of digital dollar and currently serves as an academic researcher and law professor at Columbia University. During the 2015-16 fiscal year, Lev Menand was a senior advisor to the Deputy Secretary of the U.S. Treasury and also served as an economist on the bank supervision group of the Federal Reserve Bank of New York.

How does the crypto industry feel about Joe Biden’s election?

Kristin Smith, executive director of the Blockchain Association, believes that the United States' attitude towards cryptocurrencies is likely to undergo "significant changes" during Joe Biden's presidency, but it is not yet known whether these changes are "bad news" or "good news." It is worth mentioning that thirty years ago, as a senator from Delaware, Joe Biden proposed two crypto-related ban bills aimed at strictly controlling improper behavior in the crypto-related field, but this move inadvertently stimulated the development of PGP keys. Most people believe that Joe Biden will accelerate the implementation of the second round of economic stimulus policies in the United States after his election. From this perspective, this move is likely to have a positive impact on Bitcoin, because the prices of Bitcoin, gold, and other alternative stores of value tend to rise after a large amount of US dollars flow into the market. On the other hand, as Joe Biden will implement his tax increase and environmental protection policies, the US stock market may fall sharply, and as market uncertainty continues to grow, it will also drive up the prices of safe-haven assets such as Bitcoin.

Thirty years have passed, and today Joe Biden is actively promoting and supporting technology and innovation. Although he has not made any public comments on cryptocurrency, it can be seen from the candidates for some key positions that cryptocurrency may become one of the key innovation areas that Joe Biden focuses on. In addition, one event that must be mentioned is that Joe Biden has explicitly stated that he accepts digital currency donations, which seems to show from another perspective that he will be a "crypto-friendly" new US president. Previously, Sam Bankman-Fried (SBF), founder of digital currency derivatives exchange FTX and trading company Alameda, donated $5.2 million to Joe Biden. Now it seems that SBF's donation should be considered "worth the money", because after Joe Biden is elected, at least he will not put too much pressure on his crypto industry, and may even open up more new paths for the development of the crypto industry through political influence.

Meanwhile, many people may have forgotten that Donald Trump has publicly opposed Bitcoin. Last July, Donald Trump tweeted that Bitcoin is not a currency, its price volatility is very large, its foundation is very weak, and unregulated crypto assets may lead to a large number of illegal activities, including drug trafficking and other illegal activities. Facebook's Lirba is a virtual currency with weak reliability. If Facebook and other companies want to become a bank, they must obtain a banking license, follow banking charters, and be subject to business rules like all other banks.

However, things have changed now. If everything goes well, the new US government leadership led by Joe Biden is likely to adjust the Trump administration's actions that harm the cryptocurrency market, and even increase the chances of approval of the Bitcoin Exchange Traded Fund (BTC ETF), thereby accelerating the pace of Bitcoin's mainstreaming. From this perspective, Joe Biden's successful election as US President should support further appreciation of Bitcoin.

Summarize

We have seen that the cryptocurrency market has experienced ups and downs. Although many projects have failed, there are still a large number of projects exploring various use cases. Central banks, large financial companies and large technology companies have also begun to explore ledger technology. As financial technology continues to innovate, cryptocurrencies will stimulate more companies to explore emerging payment solutions, financial solutions, and multi-party database management solutions. It has to be said that encryption and blockchain technology have become a "catalyst for change."

Whether or not cryptocurrencies are feasible, we are already living in the era of digital currency. People can safely transfer value in P2P form on the Internet while perfectly avoiding double spending. Money has become a social and economic structure, while Bitcoin and other cryptocurrencies have evolved into a speculative asset class. Blockchain technology provides an alternative that can solve verification problems and reduce network costs. It is worth mentioning that just after Facebook announced the launch of Libra, the People's Bank of China's DCEP project and the Federal Reserve's FedNow project also came into being. Although the ambitious Libra project faces many policy challenges, it is almost certain that it has begun to stimulate change.

Of course, some questions still exist. People will think about what other application areas Bitcoin, as a new type of privacy currency, can continue to develop in addition to providing a scarce digital speculative value storage function and niche applications such as digital transactions, games and gambling? What other uses are there for cryptocurrency and blockchain technology besides driving change? What benefits can P2P value transfer that cannot be achieved in the traditional financial system bring to people? And how to solve the problem of multi-party governance and collective action, how to make technology decentralized to help the crypto use case economy benefit? And more in-depth thinking like this.

We have to admit that although the crypto market is still full of scams, fraud, hackers and market manipulation, it is an indisputable fact that blockchain technology has become a catalyst for change. In addition, we need to continue to pursue the reduction of verification costs, network costs, and data privacy costs, only in this way can we promote economic inclusion. For some fragmented or difficult-to-change traditional industry fields, shared blockchain multi-party network solutions will inject fresh blood into them and revitalize these traditional industries.