The influence of the cryptocurrency sector has grown significantly over the past year, making the potential impact of the upcoming presidential election on the market a key topic of discussion among investors.
According to TD Cowen analysts, both Kamala Harris and Donald Trump are seen as more industry-friendly than Joe Biden.
Harris is believed to be likely to approach cryptocurrencies cautiously, prioritizing investor protections, while Trump may defer to his financial regulators as cryptocurrencies are not expected to be a personal focus in a potential second term.
“We view Kamala Harris as more open to crypto and digital assets than Joe Biden, although we do not view it as a priority and believe the industry could continue to face hostile regulators,” TD Cowen analysts said in a note.
If we compare Trump to Harris, the situation is more nuanced.
Trump has recently positioned himself as a crypto advocate as he seeks support from the industry. However, TD Cowen emphasizes that historical patterns suggest this newfound support will not necessarily translate into more lenient regulatory actions during a second Trump term.
The cryptocurrency lobby has leveraged the sector's wealth creation to build political influence as elections approach, banking analysts noted.
Recently, the Biden administration reached out to the cryptocurrency sector to explore possible policy directions. Meanwhile, Trump has pledged to be the “crypto president” and has abandoned his previous rhetoric critical of the industry.
Despite this, TD Cowen analysts warn against confusing campaign rhetoric with real policy progress.
“Harris is no Biden when it comes to cryptocurrencies,” analysts noted.
“We see the country as more receptive to the industry and more willing to support policy initiatives that encourage industry growth.”
However, Harris is unlikely to oppose efforts aimed at strengthening investor protections within the crypto space. This suggests that the SEC would continue to play a significant role in overseeing most tokens and trading platforms under her leadership.
Analysts believe that both Harris and Trump are expected to support legislation on cryptocurrency market structure if it is successfully passed in Congress. Such legislation could be slightly stricter on investor protection with Harris in the White House, although not to the point of significantly affecting industry operations.
A key difference may be in how each would interact with the banking sector. Trump might favor fewer restrictions, though this would likely depend on the staff he appoints, as he is expected to defer to his banking regulators on these matters. By contrast, Harris is expected to proceed more cautiously in this area.
