In the upcoming U.S. Congressional elections, the cryptocurrency industry has invested heavily, potentially leading to the election of more pro-cryptocurrency candidates.
Written by: Sarah Wynn, The Block
Translated by: Koala, Mars Finance
With a surge in funding from cryptocurrency companies in this election cycle, a significant number of pro-cryptocurrency candidates may be elected on Tuesday.
The Senate races in Ohio and Montana could influence the legislative process for cryptocurrency next year.
Whether the Democrats or Republicans control the House of Representatives and the Senate will also determine who leads key committees that will play a dominant role in regulating cryptocurrency and stablecoin legislation.
The cryptocurrency industry has injected substantial funds into the U.S. Congressional elections, which could have a significant impact on legislation in 2025.
For example, according to Open Secrets, Fairshake has raised over $200 million in this election cycle to support key campaigns, with funding coming from major cryptocurrency companies like Ripple and Coinbase. Some of the biggest races to watch on Tuesday include the Senate contests in Ohio and Montana.
Alison Mangiero, Executive Director of the Proof of Stake Alliance, stated that there will be more seats in Congress occupied by pro-cryptocurrency individuals, marking a first in this election. The Proof of Stake Alliance is an advocacy organization for proof-of-stake technology.
"Regardless of the outcome of each campaign, we will see the most pro-cryptocurrency Congress in history," Mangiero said in an interview with The Block. "There is still a lot of work to be done in terms of education and industry, as we have invested so much in these campaigns, and now the real work is just beginning."
Presidential candidates themselves have also commented on the cryptocurrency industry, which is a unique phenomenon this election year. Vice President Kamala Harris stated that her administration would encourage innovative technologies such as artificial intelligence and digital assets while protecting consumers and investors, according to her 80-page economic plan.
Former President Donald Trump promised to end the "illegal and un-American crackdown" on the U.S. cryptocurrency industry and supports a cryptocurrency project called "World Freedom Finance."
Meanwhile, prediction markets have also played a significant role in this year's elections. A court ruled that the prediction market Kalshi can continue to offer election betting, and its markets have begun to launch. As of November 1, betting on who will win the U.S. presidential election on the decentralized prediction platform Polymarket surged to nearly $3 million. Notably, Polymarket does not operate in the U.S.
Analysts say that prediction markets, like any market, are not always accurate but can effectively aggregate real-time public sentiment. The Block cited Kalshi's data to understand how the Congressional elections might unfold. For reference, the latest polls from 538 show that Republicans have a 91% chance of taking the Senate, while control of the House is much closer. According to 538's data, Republicans have a 51% chance, while Democrats have a 49% chance. All data was collected on Monday morning.
The probability of Republicans winning the Senate is 80%, while Democrats have a 20% chance.
One of the most influential committees in the Senate is the Senate Banking Committee, which has jurisdiction over the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. Both agencies are responsible for regulating cryptocurrency. Currently, the committee is led by Ohio Democratic Senator Sherrod Brown, who has been critical of the cryptocurrency industry and is in a fierce competition with pro-cryptocurrency Republican candidate Bernie Moreno in the state.
If the Senate shifts to Republican control, then regardless of whether Brown wins his campaign, South Carolina Republican Senator Tim Scott may take the helm of the Senate Banking Committee.
Scott is currently a senior Republican on the Senate committee and recently expressed support for the cryptocurrency industry. In August, he proposed establishing a subcommittee focused on the digital asset industry if he becomes chair. Scott's spokesperson stated that if this happens, the senator plans to develop a regulatory framework for digital assets.
"Senator Scott will work to establish a regulatory framework that creates a reliable pathway for the trading and custody of digital assets to promote consumer choice, education, and protection, while ensuring compliance with appropriate Bank Secrecy Act requirements," the spokesperson said in an email statement to The Block.
Ron Hammond, Director of Government Relations at the Blockchain Association, stated that if Scott creates a subcommittee focused on digital assets, it could become a "forerunner" for future cryptocurrency legislation. For example, the House Financial Services Committee has a subcommittee focused on digital assets that has played a significant role in launching cryptocurrency bills.
"We can assume that with this subcommittee, the Senate could not only review the House's bills but could even potentially introduce its own bills, whether on stablecoins, market structure, or other anti-money laundering legislation," Hammond said in an interview with The Block.
If the Democrats control the Senate, Brown is likely to continue as chair of the Senate Banking Committee. However, if he loses the election and the Democrats still hold a majority, Massachusetts Democratic Senator Elizabeth Warren could become chair. However, this scenario is less likely, as Ohio is a swing state, so the Democrats must win other states to control the Senate.
"For Warren to become chair, there would have to be a lot of very unlikely circumstances," Hammond said.
Warren has been critical of cryptocurrency and is pushing for the cryptocurrency industry to comply with anti-money laundering rules, supporting a bill that would expand the Bank Secrecy Act's requirements to include know-your-customer rules for miners, validators, and wallet providers.
Mangiero of POSA stated that she expects legislators in a Republican-led Senate to be more willing to advance already proposed bills. Two notable bills have gained support in the House—one focusing on the cryptocurrency market structure known as FIT21, and another focusing on regulating stablecoins.
Both Democrats and Republicans are eager to pass a bill on stablecoins. In the Senate, Tennessee Republican Senator Bill Hagerty introduced a draft bill in October that closely resembles the ongoing work in the House.
"If the Senate is led by Republicans, then the likelihood of achieving this goal is greater," Mangiero said in an interview with The Block. "But I think Democrats are indeed willing to engage on the stablecoin issue."
As for the likelihood of a Democrat-led Senate passing market structure legislation to regulate cryptocurrency, Mangiero stated, "Anything is possible."
The probability of Democrats taking the House is 53%, with Republicans closely following.
The House Financial Services Committee has been key to cryptocurrency-related legislation, with several bills passing under the leadership of its chair, North Carolina Republican Congressman Patrick McHenry, over the past few years. McHenry will retire in January 2025, leaving room for new leadership.
McHenry has played a crucial role in leading efforts on stablecoin legislation and FIT21. In September, he stated that he believes his bill could gain momentum during the lame-duck session, which is the period after the election and before the new Congress takes office in January.
Hammond stated that whichever party wins the White House could also win the House. He added that the chair of the House Financial Services Committee could also be elected in November or December. If Republicans control the committee, potential nominees to lead it include Arkansas Congressman French Hill, Kentucky Congressman Andy Barr, Michigan Congressman Bill Huizenga, and Oklahoma Congressman Frank Lucas—all of whom are friendly to cryptocurrency.
"Whoever the Republican chair is, if they can't get it done by the end of this year, their focus will likely be on stablecoins and market structure, and then probably DeFi and NFTs until the end of their term in 2026," Hammond said.
If Democrats take the House, California Congresswoman Maxine Waters may again lead the House Financial Services Committee. Waters has sometimes criticized cryptocurrency but is also very willing to allow stablecoin legislation to pass. At a congressional hearing in September, Waters called for a "big deal on stablecoins" to be reached by the end of the year.
"I have publicly stated bipartisan cooperation—let's see what you will do," Waters told McHenry at that hearing.
"So if this work can't be completed this year, she is likely to pick up the old work again," Hammond said. Waters did not respond to The Block's request for comment regarding what her priorities for cryptocurrency would be if she were to chair the committee.
However, Hammond stated that Waters opposes FIT21, so the path for that specific bill's implementation is unclear, but he added that it depends on whether Waters believes that digital assets need a regulatory framework.
The White House has expressed opposition to FIT21 but stated in a May statement that it "looks forward to working with Congress to ensure a comprehensive and balanced regulatory framework for digital assets." Meanwhile, SEC Chair Gary Gensler has stated that cryptocurrency does not need new rules and has called for cryptocurrency entities to register and comply with existing rules.
Hammond stated that tax legislation will also emerge in 2025, as lawmakers face a deadline for the expiration of Trump's Tax Cuts and Jobs Act at the end of next year.
"When there is a major tax bill on Capitol Hill, the entire tax code opens up," he said, adding that cryptocurrency tax proposals will be brought up in discussions. For example, part of the discussion may include a bill proposed by North Carolina Democratic Congressman Wiley Nickel and Georgia Republican Congressman Drew Ferguson, which would clarify that staking rewards should only be taxed upon sale.
Specific elections to watch
Hammond stated that the Senate race in Ohio may be the most significant. Another contentious race could be the Senate race in Montana, where Democratic Senator Jon Tester will face Republican Tim Sheehy. Stand With Crypto gave Sheehy an A for his pro-cryptocurrency stance, while Tester received a C.
Notably, Tester is one of the few Democrats to overturn an SEC announcement that set certain accounting standards for companies holding cryptocurrency, including Senate Majority Leader Chuck Schumer, a Democrat from New York.
Overall, Hammond stated that after speaking with candidates across the country, many seem to have a friendly attitude toward cryptocurrency.
"The good news is that many campaigns have pro-cryptocurrency Democrats and pro-cryptocurrency Republicans," Hammond added. For example, in the Senate race in Arizona, Republican candidate Kari Lake and Democrat Ruben Gallego both received an A rating from Stand With Crypto. According to news reports, Fairshake provided millions of dollars in funding for Gallego's campaign.
Mangiero of POSA elaborated that next year will be "the most pro-cryptocurrency Congress ever." She said this will include those who consider themselves pro-cryptocurrency, but it also means that future legislators may be more open-minded.
"I also think you will encounter at least some people who are a bit more open-minded because they have to be educated on these topics to effectively govern the country," she said.
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