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What The Biden Administration Means for Bitcoin

In brief

  • President-elect Joe Biden doesn’t have a stated position on Bitcoin, although he says he doesn’t own any.
  • Some of Biden’s potential cabinet picks are already crypto-savvy.
  • The Biden presidency could lead to more regulation of cryptocurrency, reversing Trump’s mostly hands-off approach.

If you checked United States Presidential candidate Joe Biden’s Twitter account on July 15, you would’ve seen a rather surprising message from the former Vice President, now President-elect. Not only was his account tweeting about Bitcoin, it offered to double any amount sent to the specified account within 30 minutes as a way of “giving back to the community.”

The offer—and the tweet—were the work of hackers who’d broken into Biden’s account, along with those of 130 other prominent public figures, including politicians and celebrities.

The incident did, however, prompt Biden’s only public statement to date on Bitcoin. The day after the Twitter hack, Biden’s campaign tweeted, “I don’t have Bitcoin, and I’ll never ask you to send me any. But if you want to chip in to help make Donald Trump a one-term President, you can do that here.” Expectedly, the link didn’t accept Bitcoin—just US Dollars.

In truth, the incoming 46th President has no known position on Bitcoin or cryptocurrency. Biden never tweeted about it before the July hack, and an email to his campaign from Decrypt seeking his position yielded no response. A pro-Biden political action committee, Draft Biden 2016, accepted Bitcoin donations back in 2015, although Biden ultimately did not run for president and the PAC was not officially connected to the then-VP.

The outgoing President Donald Trump has tweeted that he is “not a fan of Bitcoin and other cryptocurrencies,” but has largely been hands-off in his handling of digital assets, as the agencies under his command reckon with the impact and influence of crypto on their respective fields.

One could argue that Biden has plenty of other issues piling up on the Resolute desk as he moves ahead with his transition plans, from the coronavirus pandemic to the state of the economy and Trump’s record on both domestic and international politics.

Still, Biden’s term in office could have a significant impact on cryptocurrency as the industry continues to grow and mature in the US and the world at large. Here’s a look at what Biden’s cabinet picks think of cryptocurrency, as well as perspective from multiple crypto industry leaders that Decrypt spoke with.

Biden’s crypto cabinet?

Biden’s Vice President-elect, Kamala Harris, current US Senator and former Attorney General of California, has not publicly shared her take on Bitcoin and cryptocurrency. However, her team includes Ryan Montoya, the former Chief Technical Officer of the Sacramento Kings, which is known as the NBA’s most tech-forward and crypto-friendly team. He is Harris’ Director of Scheduling and Advance, and will have the ear of the VP.

Beyond that, Harris has won the praise of at least one prominent crypto luminary who believes she could be hip to Bitcoin. Investor Tim Draper told CoinTelegraph in August that he’s seen her in action in California politics and thinks she could ultimately understand and see the potential in crypto. “I think she has a good head on her shoulders, so she can learn crypto,” said Draper. “We should get her a Bitcoin wallet if she doesn’t already have one.”

Yellen in the face of Bitcoin

One of the first key economic positions filled by Biden is that of Treasury Secretary, with the President-elect picking former Federal Reserve Chair Janet Yellen as his nominee. Yellen is known for her combative stance on Bitcoin and cryptocurrency; in October 2018, she said of Bitcoin, “I will just say outright I am not a fan.” A year earlier, she dismissed it as a “highly speculative asset,” while noting that the Fed played little role in cryptocurrencies.

As Treasury Secretary, Yellen would be in charge of formulating the administration’s fiscal policy, having a much greater impact on cryptocurrencies. And she’s come out swinging. In her January 2020 confirmation hearing, she described crypto as being “of particular concern” for its role in facilitating criminal activity.

She continued: “I think many are used, at least in a transaction sense, mainly for illicit financing. And I think we really need to examine ways in which we can curtail their use, and make sure that anti-money laundering [sic] doesn’t occur through those channels.”

Other Biden picks have taken a more measured stance on Bitcoin. The President-elect’s choice to head the SEC is Gary Gensler, former chairman of the Commodity Futures Trading Commission under Obama, to advise on tackling Wall Street Oversight.

Gensler brings a wealth of expertise with blockchain and crypto to the Biden administration, having taught a course at MIT about the use of Bitcoin and blockchain in finance. In a CoinDesk op-ed written last December, he described Bitcoin as a “catalyst for change,” while noting that crypto exchanges have “not yet [been] appropriately brought within public policy frameworks,” and highlighting that crypto markets have been “rife with scams, fraud, hacks and manipulation.”

Ramping up cryptocurrency regulation?

The incoming administration will lead to a rush of new appointments at regulatory agencies, explained Drew Hinkes, a blockchain-focused attorney at Carlton Fields. “A new administration may fill some of the many open positions at various regulatory agencies which have remained vacant for most of the current administration,” he told Decrypt. “This may be a dual-edged sword—on one hand, this may facilitate enforcement. However, it may also facilitate policy creation. With more resources, we could see more no-action relief, and more approval of crypto instrument issuances.”

“A new administration may fill some of the many open positions at various regulatory agencies.”

Drew Hinkes

CoinTracker co-founder Chandan Lodha notes that Biden’s proposed tax plan would affect crypto holders earning $400,000 or more per year, and especially those making $1 million or more.

“Biden’s tax plan calls for increasing taxes on those making $400,000 or more per year. The most direct impact on cryptocurrency would be for those in this high-income bracket, who could see their ordinary income tax rate increase from 37% to 39.6% (for short term crypto capital gains) and see all capital gains taxed at 39.6% on income over $1M + repeal of step-up in basis for inherited cryptocurrency,” Lodha told Decrypt. “Essentially, most crypto users wouldn’t see a difference, those making over $400,000 per year could see a slight increase in taxes on their crypto, and those making over $1M per year could see significant increases in their crypto taxes.”

Shyft Network co-founder Juan Aja Aguinaco tells Decrypt that Biden’s ability to impact cryptocurrency as president would depend on several factors, including the composition of the Supreme Court. Even so, he believes that the Biden administration could be crypto-positive, albeit more hands-on than Trump has been, and noted some prominent Democrats in favor of regulation.

“He may ease up on the hard stance taken by the Trump administration,” Aguinaco said. “He may go for a more exploratory approach, and enable the development of blockchain-based solutions.”

He noted that historically, Democrats have tended to be more protective of end-users, citing Rep. Maxine Waters’ request that Facebook pause development and deployment of Libra until Congress could better understand the implications for them. “DeFi and its volatile growth may become targets of future end-user/investor protection or regulation,” Aguinaco continued.

“Alexandria Ocasio-Cortez, a prominent presence and influence in the party, also spoke against corporate-controlled currencies and showed favor for centrally-managed money. While her statement is more targeted at stablecoins, I wouldn’t be surprised if the representatives from the Democratic party take a more protective stance, and not a hands-off approach.”

In December 2020, three Democratic Representatives—Rashida Tlaib, Stephen Lynch and Jesús G. “Chuy” García—went a step further, announcing the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act. The bill would require stablecoin issuers to have a banking charter and earn regulatory approval from the Federal Reserve, the FDIC, and other agencies before issuing that coin.

“Getting ahead of the curve on preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color that traditional big banks have is—and has been—critically important,” said Rep. Tlaib.

The crypto-cautious lobby

The STABLE Act forms part of a pushback against crypto from within the Democratic Party’s ranks. In November 2020, a group of six Democratic Representatives (among them Tlaib, Lynch and García) criticized outgoing Acting Comptroller of the Currency Brian Brooks’ “excessive focus on crypto assets and crypto-related financial services,” during a time when stimulus checks from the COVID-19 relief bill had yet to filter through to Americans.

A month later, Rep. Waters penned a letter to Biden urging that some crypto-friendly policies adopted by the Office of the Comptroller of the Currency (OCC) be rescinded. She wrote: “Your appointed officials at the Office of the Comptroller of the Currency (OCC) must also not assume, as their predecessors have, that a law Congress passed over 150 years ago somehow gives them authority to provide a national bank charter to non-bank fintech or payment companies.”

Under Brooks’ tenure as Acting Comptroller, the OCC has issued guidance that national banks can take custody of clients’ crypto assets, and stated that national banks can hold stablecoin reserves for customers. Rep. Waters recommended that both policies be rescinded.

In some ways, then, it’s more of the same; an ongoing struggle between crypto advocates and crypto skeptics even at the highest levels of government. However, the fact that Biden appointees such as Gary Gensler come with a background in crypto and blockchain, serves as an indication of just how much the space has matured since Bitcoin’s invention over a decade ago.

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