Bitcoin (BTC) first arrived more than three election cycles ago. Yet, the 2024 United States presidential election is the first time that Bitcoin (and crypto more generally) have come close to being regarded as a key election issue. The cult-like advocates for the ideals laid out in Satoshi Nakamoto’s white paper have become an influential subset of single-issue voters, dedicated to the cause despite recent years being marred by a bear market and broader industry turmoil such as the collapse of the once-lauded crypto exchange FTX. Tides have recently turned for the industry and its supporters, with Bitcoin prices holding steady and institutions like BlackRock, the world’s largest asset manager, claiming that Bitcoin is this generation’s store of value. As the election race heats up, the question now remains: what role will this modern form of money play in the future of the world’s most powerful economy?
According to the Fed, only 3% of the dollar’s original purchasing power remains in 2024, leading many developing economies to consider alternatives to the dollar for trade. There are also concerns that current monetary policy decisions being made to avoid recession could actually lead to hyperinflation of the dollar and economic decline. In recent years, the economy has oscillated between periods of explosive growth, catalyzed by loose monetary policy; and teetering on the brink of economic destruction exacerbated by the impending debt crisis. The rising geopolitical tensions and conflicts of the past few years have added further to this volatility.
Such chaos has contributed to an ever-increasing wealth gap, marked by an exponentially wealthier upper class and an erosion of the middle class. Since its emergence, Bitcoin has been regarded by many as a potential hedge against economic volatility for the middle class. Aspirationally, it’s the inflationary-resistant asset that can bring financial independence to the weakening middle class, but the dollar continues to underpin the global economy. The dollar has retained the trust of many retail investors despite its decreasing purchasing power.
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Today, America finds itself balancing an unprecedented predicament: a weakening dollar on one hand and an asset with the potential to address many of the glaring financial issues that a squeezed middle class faces on the other. How the latter is discussed and addressed will have the greatest impact on what the world’s foremost economy will look like in 25 years.
Against this backdrop, here are four bold predictions on how this year’s election will impact the future of Bitcoin and digital assets in the United States.
Regardless of who wins, Gary Gensler may be out
Securities and Exchange Commission Chairman Gary Gensler has made few friends in the crypto community since taking over at his agency. While he has racked up some notable wins, his regulation-by-enforcement approach has also suffered losses in the courts. Former President Donald Trump has promised to “fire” Gensler should he be elected, but this has never actually happened before. Traditionally SEC chairs resign when there is a change in the White House during their term. If we see a win by Vice President Kamala Harris, it would be unsurprising for her administration to take a similar stance as her opponent in an attempt to get in the industry’s good graces. Change is in the air.
A Harris victory could benefit Bitcoin — and a Trump victory could favor Ethereum
Bitcoin has largely acted as a commodity that sees inflows when US interest rates are lowered and capital becomes cheaper. Given that a Harris administration is likely to see a continuation of the current monetary policy and higher levels of government spending, the crypto market should hold steady and possibly climb. Conversely, a Trump victory would mean incentives for crypto companies to incubate in the US — which is something the country has been lacking. An argument could be made that under a Trump administration, a clearer regulatory framework will be forthcoming and, as a result, more opportunities within the world of decentralized finance (DeFi). Given DeFi ecosystems are largely built on Ethereum (ETH), a Trump administration is likely to benefit it and other layer-1 protocols.
A Harris administration could see the introduction of a crypto capital gains tax
While an electoral victory would allow Harris to formulate her own policy agenda, she has served three and a half years in an administration that has entertained the idea of a crypto-specific capital gains tax. Given the amount of capital that is set to flow into the asset class, it is hard to see a world in which the US government does not try to take its slice of the pie as crypto becomes embedded with traditional finance. Increased taxes seem less likely under a Trump administration given his platform has heavily professed the desire to “look out” for crypto diehards.
Trump will release a formal plan on Bitcoin and digital assets ahead of the election
While Harris has been largely quiet about digital assets on the campaign trail — mentioning them only in passing alongside other emerging technology — Trump has been formally courting the “crypto vote.” The former president became the first and only president to attend the 2024 Bitcoin Nashville event this summer, where he famously stated the future of Bitcoin would be in the US and that he would “keep Elizabeth Warren and her goons away from your Bitcoin.” He has also launched his own DeFi project, World Liberty Financial. If formal policy recommendations on cryptocurrencies and digital assets are to materialize ahead of the election, it’s likely they will come from the Trump campaign.
Change almost always takes far longer than expected and transpires differently than planned. Bitcoin is no different. The mission and message behind Bitcoin is perhaps the most powerful signal of liberating forces in centuries. However, the institutions that hold power are the ones that stand to lose the most if the core tenets of Bitcoin and cryptocurrencies are realized.
Solo Ceesay is the CEO and co-founder of Calaxy, a social marketplace for creators, and a strategic advisor to Karate Combat. He holds an undergraduate degree in economics from The Wharton School of the University of Pennsylvania.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.