These are just a few quotes that the two leading presidential nominees have used in the past to describe cryptocurrency. For the last decade and a half, we’ve heard cries from financial institutions, business leaders, and politicians that crypto is not only inherently worthless, but that it is a currency to be associated with criminal activity. As we’ve covered in past blogs, financial institutions and business leaders have begun to widely accept crypto as a currency and an investment. The stigma surrounding digital currency is starting to go away, fueled by developments such as the approval of ETFs, BTC and ETH. Now that the crypto pessimists are in the minority, it no longer pays to vilify the asset.
It is true that political concern regarding cryptocurrency is not just based on the argument that there is no physical asset or institution to back the coin. Crypto cannot be regulated, so crypto cannot be controlled. The US government relies on the Federal Reserve to manage money supply and circulation. Through this system the government has power over how it is transferred, tracing the use of the cash, and ultimately taxing individuals and businesses. Crypto undermines this. By bypassing the financial infrastructure of a country, it can essentially circumvent capital controls. In modern times, we often see governments around the world implementing legislation to increase their control. An example of this would be the Patriot Act signed into law following the terrorist attacks of 9/11 which allow our government to enhance surveillance of its citizens. We rarely, however, see government willingly give up control.
Until now, most politicians have maintained their anti-crypto stance in the face of mainstream adoption, but election years change everything. Prior stances, beliefs, convictions, and unfortunately at times, morals go out the window to appease voters. Harris and Trump, for example, have recently began to shift their stance on crypto. We’d like to believe this shift was caused by the politicians suddenly realizing the value that crypto and blockchain technology can bring to our economy because the potential truly is there. In our opinion the evidence for this was present during the last election year in 2020. What wasn’t as present then was the widespread support for crypto that we see today. The bottom line is that more voters favor a politician that has a pro-crypto stance now, so now most politicians do. Regardless of the motivation behind the shift of their stance on crypto, we view this change as an exciting and promising development in crypto as a household investment.
The shifting of political opinion is great, but there’s also compelling ideas to back it. We’ve recently been witness to several crypto conferences in which leaders in the industry presented exciting visions for the currency. Robert F. Kennedy, for example, presented interesting ideas. The US government currently holds close to 120,000 BTC derived primarily from law enforcement seizures. This is a value of close to $8 Billion. He proposes that those coins are transferred to the US treasury. He also proposes that the government implement a program to purchase 550 BTC to build a reserve. He was even quoted saying, “I’m gonna put the entire US budget on blockchain.” Trump made similar comments at a Bitcoin conference. Reports show that Harris is reaching out to the leaders of crypto exchanges but has not taken a formal stance on the issue. Many believe it’s only a matter of time until her support is made public. Once radical ideas don’t seem that unrealistic anymore.
It will be interesting to see how the evolving political landscape influences the future of cryptocurrency. Though support for the currency varies from politician to politician, the trend is clear. A pro-crypto stance not only makes sense but may be necessary in order for officials to garner enough votes for election. As more politicians publicly embrace and endorse these digital assets, the legitimacy and confidence in crypto are likely to surge, driving higher demand and potentially leading to substantial value appreciation. Having a small holding in this asset class now makes more sense than ever. Besides for political support, some of the recently presented ideas show potential that crypto may be actively utilized in economic and governmental frameworks, creating a robust foundation for its continued growth and stability. We’re keeping a close eye on how the 2024 election influences financial markets and we will keep you posted on this very important and ever-changing topic.