- Despite blocking a bill seen as pro-crypto, Biden still backs digital assets.
- US presidential candidates see crypto voters as a powerful bloc.
Joe Biden’s whiplash-inducing pivot to courting the crypto industry is sincere, Pantera Capital analysts say — despite the president blocking a bill seen as pro-crypto.
The bill would have scrapped an unpopular piece of Securities and Exchange Commission guidance, which essentially deters large US banks from offering large-scale crypto custody services.
“We believe Biden’s veto more likely reflects his reluctance to publicly oppose his appointed commissioner,” Cosmo Jiang and Erik Lowe wrote in a research note, referring to SEC Chair Gary Gensler.
Jiang is a portfolio manager, and Lowe is head of content at Pantera, a hedge fund that specialises in digital assets.
Crypto has increasingly become a hot-button topic in the run-up to the US presidential election.
‘Biden is choosing instead to take the quieter path of asking the SEC to change the rule on their own.’
— Pantera Capital analysts
While presumptive Republican presidential candidate Donald Trump has placed himself firmly in the pro-crypto camp, Biden has taken a more ambiguous stance.
However, Jiang and Lowe say Biden is slowly warming up to the industry despite his publicly blocking a bill to tear up Staff Bulletin 121.
Death by veto
Gensler is firm that the SEC guidance remains in place.
That’s despite opposition from not only the crypto industry and its allies in Congress but also the powerful Wall Street lobby.
The Senate voted to pass a resolution scrapping SAB 121, but Biden blocked the effort.
Pantera implied that siding against Gensler openly would have embarrassed the chair. Plus, presidents tend to respect the independence of regulatory agencies from the executive branch of government.
Biden is “choosing instead to take the quieter path of asking the SEC to change the rule on their own,” Jiang and Lowe wrote.
Even as he vetoed SAB 121, Biden “affirmed a favourable stance toward onshore crypto innovation, which signals a shift in tone in the current administration,” they added.
The White House said the administration was “eager” to work with Congress to establish rules for crypto, “which will promote the responsible development of digital assets and payment innovation and help reinforce the United States’ leadership in the global financial system.”
FIT21 Act
Pantera noted that Biden did not veto a far more significant bill — the pro-crypto FIT21 Act, which passed the House of Representatives in mid-May.
FIT21 will evolve as it moves through the Senate, the research note said, but it’s still a “step toward creating a more defined regulatory environment for cryptocurrencies.”
“Although the Senate’s move against SAB 121 was vetoed, it showcases a broader push to balance regulation with innovation in the crypto space,” the note added.
The Biden administration has been influenced by powerful crypto sceptics, including Senator Elizabeth Warren and Gensler.
However, in recent months, Biden’s presidential campaign has reportedly been reaching out to the industry.
Trump has hosted Bitcoin miners and non-fungible token investors at his Florida resort, Mar-A-Lago, and accepts campaign donations in crypto.
Trump’s — and now Biden’s — endorsements are a response to a few factors, Pantera’s note said.
The two candidates are trying to appeal to a new voting bloc, the note said, citing research that shows that 40% of American adults own crypto in 2024.
Plus, explicitly pro-crypto candidate Robert F. Kennedy Junior is “taking crucial votes in swing states,” the note said.
“Ultimately, politicians reflect the demands of the marginal voter, and the major political parties are realising that being pro-crypto is a winning strategy.”
Joanna Wright reports on regulation and politics for DL News. Got a tip? Email her at joanna@dlnews.com.