Crypto.news recently spoke with Bing Wang, Head of Legal at BasedVC, who shared his perspectives on the political rise of cryptocurrencies and the upcoming regulatory transformations.
As the 2024 US elections approach, the political landscape surrounding cryptocurrencies is undergoing major changes.
Surprising alliances are forming in Congress, with crypto-friendly laws gaining bipartisan support. Key figures such as Chuck Schumer and former House Speaker Nancy Pelosi, who have traditionally held different views, are now emerging as unexpected allies.
The Biden administration has begun to show a newfound openness with crypto policy, suggesting that skeptics like Senator Elizabeth Warren may soon find themselves isolated.
On the Republican side, former President Donald Trump has stepped up his support for the crypto community, promising to protect digital asset traders and accept campaign donations in cryptocurrency.
Clearly, the role of cryptocurrencies is expected to be a pivotal issue this year, something that could shape the future regulatory landscape for the emerging sector.
Wang believes that this shift in political dynamics will accelerate the mainstream adoption and integration of cryptocurrencies in the US
How important do you think the role of cryptocurrencies will be in the 2024 US election?
Crypto has always been important in American politics. The well-known case of Sam Bankman-Fried and FTX led him to administer cryptocurrency to candidates in the US midterms. However, the impact in the upcoming 2024 election will be disproportionate. With crypto-friendly legislation moving through Congress over the past 3 weeks, Democrats and Republicans alike are inclined to embrace crypto even further. The elections will have crypto on its agenda, and having a positive sentiment about it will be an important talking point.
The Biden administration has shown a shift in its stance on cryptocurrencies, evidenced by the approval of mock Ether ETFs and engagement with experts in the crypto industry. What impact might these changes have on the cryptocurrency sector, and do you think they will address the concerns of crypto enthusiasts who have been critical of the administration’s previous policies?
The Biden administration’s sudden position shift is a big moment in crypto. Some have claimed that this is an attempt to sway the voters, but that doesn’t matter as it seems to address concerns that the industry has long had. The House passed a bill to repeal the Securities and Exchange Commission crypto guidelines that the regulator has negatively gripped the market. If signed into law, the new bill would help overhaul the SEC and CFTC oversight of crypto and create a more streamlined guide to crypto regulation. This is a huge win for the industry.
Considering the bipartisan support for cryptocurrency-related legislation such as the Deploying American Blockchains Act and the FIT21 Act, what specific regulatory changes can the crypto community expect in the coming years?
Pro-crypto senators band together, and an effort to revive previously moribund crypto bills. The Biden campaign has begun discussing digital asset policy with Democratic allies, while Stabenow’s bill to overhaul how the SEC and CFTC share oversight of crypto is back on the table. Stablecoin legislation is also being negotiated in the House. The coming years are expected to see a flurry of legislation that will attempt to provide a clear path on crypto regulations, which most crypto companies have longed for.
Do you think government engagement with crypto industry experts will help improve the public’s understanding and awareness of cryptocurrency technologies?
Just as the Senate has tried to engage with social media companies like Facebook, TikTok and X (formerly Twitter), stakeholders should meet at roundtables to discuss pressing issues. Avoiding meeting with experts in the crypto industry can only be detrimental in the long run. As discussions continue, I firmly believe it will help boost confidence in digital assets.
What are your thoughts on the potential consequences of appointing crypto-friendly officials to key regulatory positions?
Well, crypto-friendly officials will generally mean faster decisions and a more positive outlook on crypto by key decision makers. I don’t see a net negative to this move, except that it will help improve policy making in the crypto space. Anti-crypto crusades by uninformed officials will only fester with time, and most will have no choice but to get with the program.
How might US policy changes affect the growing interest in self-preservation and privacy within the crypto community?
Changes in policy will significantly affect how crypto affects the crypto landscape. Increased scrutiny will undermine the privacy features of some cryptocurrencies, as regulators may require a stricter approach to traceability and transparency in transactions. Stricter KYC and AML requirements may be put in place.
And what might the broader implications be for crypto-security and user autonomy?
It may also cause development in the space, as better hardware and innovative cryptographic methods may result from regulatory approaches aimed at improving privacy and security. The downside could be that regulatory action could cause a rift between the decentralization ideology for which cryptos are created and the centralized custodial services of the traditional financial system.
How do you think regulators will respond to the increasing demand for privacy and self-preservation in the cryptocurrency community?
Regulators have a few options for this. First, regulators can undertake educational initiatives to inform the public about the best ways to secure their tokens and use privacy-enhancing technologies. Second, startups and crypto businesses may be allowed to test regulatory sandboxes for experimental purposes without full commitment to compliance requirements. This can help test privacy and self-preservation solutions under supervision. Another approach is to strike a balance between privacy and regulation. Regulators can allow privacy features in cryptocurrencies while balancing them with the mandate to enforce investigation in the event of illegal activity or terrorist financing.
What impact might the increased political activism and organization within the crypto community, such as the formation of crypto-focused PACs, have on the legislative process?
Since Coinbase and its major campaign finance partners, Ripple and Andreessen Horowitz, poured in about $161 million to spend on the 2024 US elections, the massive obstacle, the US legislature, has begun to change. Crypto-focused PACs are interested in growing the number of pro-crypto members, and that is exactly what is being done. The next Senate and House of Representatives are expected to have more pro-crypto lawmakers than ever. This can only mean one thing: more crypto-positive laws or regulations.
Could the government’s increasing support for cryptocurrencies and blockchain technology lead to backlash from the traditional financial sector?
Traditional financial systems already see crypto as a threat. With government support, crypto could be at the top of the kill list. This can take various forms, including regulatory pressure by lobbying lawmakers, technological resistance by refusing to integrate crypto into their operations, imposing barriers for crypto businesses to operate on their platforms, and even PR campaigns to publicize discouraged from adopting crypto.
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