A Changing Age in Crypto Policy
As the world advances into a new age of technology and methods of monetary exchange, it is important to understand the fundamentals of government policy that facilitates this change towards the future.
What does the landscape look like right now?
Right now, the United States does not have a centralized policy within the realms of cryptocurrency, leaving individual states and actors to implement their own legislation on the subject. This creates a realm of differences within the US as different states employ different actions upon different entities. However, as the United States federal government shifts their attention towards technology, crypto giants are looking to ensure that their market remains as free as possible: ensuring that the fundamental thesis of the crypto industry remains strong.
How are firms looking to change the industry?
With the influx of federal policy looking to change the cryptocurrency landscape, firms are looking to influence legislation in an attempt to protect the private side of the industry. That’s why, cryptocurrency lobbying in just the first 3 months of 2024 has been more than in the entirety of 2021 alone. With changing times comes entities from both the private and public sectors looking to ensure that they stay winning.
Why is there a discrepancy between the public and private sectors?
The main reason why cryptocurrency is becoming a hot commodity on Capitol Hill is due to the difference in how the Securities and Exchange Commission (SEC) and investors view it. Many investors view crypto as an unregulated and new field that allows them to maximize profits with minimal government intervention; they intend to keep it that way. With over 23,000 different cryptocurrencies, it is easy to see how volatile and sporadic the market can get. However, many investors argue that such risk is what makes cryptocurrency such an appealing new investment in your portfolio.
On the other hand, the SEC -as a government organization- looks to ensure market stability and compliance with strict federal standards. This could mean that company balance sheets must now log crypto investment and transactions on their balance sheet to minimize the risk of financial loss, among other harsher standards that could be imposed over the coming years. In essence, the SEC and other governmental bodies look to standardize the cryptocurrency industry and turn it analogous to other tradeable entities such as equities (stocks, options, etc.), commodities, or currencies. In an effort to implement standards to federal liking, however, the US government continues to face severe pushback from the private sector.
Why does this matter now?
Seemingly inconsequential, this back and forth between the government and the private sector will dictate many important governmental changes in the near future. One such example is the 2024 election. Indeed, polls report that over one third of respondents believe that stances on crypto policy will play roles in the upcoming election, and nearly 77% believe that presidential candidates must be knowledgeable about the industry.
As the industry will be projected to grow at a 12.5% compound annual growth rate (CAGR) in the near future, it is no surprise that voters around the country will be tuned into what their presidential candidates have to say about the matter. Conclusively, with a new age of technology comes a new debate to be had between candidates, new legislation to be passed, and new speeches to be given about, so every battle between the government and the private sector remains pivotal for a new wave of policy making in the United States.
Cites:
https://www.washingtonpost.com/business/2024/05/25/crypto-lobbying-politics-washington/
https://stevenscenter.wharton.upenn.edu/publications-50-state-review/