Over the last few weeks, US President Joe Biden has started reaching out to major players in the crypto space, potentially signaling that his administration is walking back their recent crypto crackdown.
However, with election season rapidly approaching, the industry finds itself questioning what to expect in the long run.
Biden’s unpopular crypto crackdown
The Biden administration has been supportive of controversial SEC crypto tax and custody regulations that many in the crypto industry have criticized as impractical and detrimental to the space.
The regulations would see to it that investors would be unable to write off capital gains losses on unprofitable crypto trades made in quick succession or between similar assets, making many types of crypto trading and yield farming untenable.
Financial institutions dealing in crypto would also be required to adhere to lengthy crypto custody reporting guidelines that would consume resources and potentially overwhelm the accounting departments of even the largest businesses in the industry. The administration states that these guidelines could generate $40 billion in tax revenue over the next decade.
These guidelines are part of the SEC’s Staff Accounting Bulletin rules called SAB 121. Biden has signaled that he aims to overturn a recent ruling to scrap these guidelines, with lawmakers and industry participants throughout the crypto and blockchain space urging him to reconsider, and crypto lobbyists have donated $78 million in funding to politicians supporting crypto-friendly tax and custody regulations.
Crypto super PAC fights back
Three separate political action committee’s have joined forces to create a super PAC aimed at funding pro-crypto politicians. The three groups are called Protect Progress, Fairshake, and Defend American Jobs.
While the full list of donors will not be available until early next year when campaign finance reports are disclosed, a number of household names are reportedly taking part.
The list so far includes P2P payments giant Circle, which has long been supportive of bringing in clear regulations from government into crypto and crypto banking settlement provider Ripple, which would be seriously affected by the proposed regulations andd has now increased its total donation to $50 million since last year.
Other super PAC members are crypto exchange Kraken, the Paradigm investment firm, and a number of individual donors including Coinbase CEO Brian Armstrong.
The fund has reportedly raised approximately $110 million so far to donate to candidates that would influence regulations in their favor and away from the restrictive guidelines proposed in SAB 121.
Joe Biden’s new stance on crypto
The Biden administration has reportedly been reaching out to crypto institutions and experts for discussion on the nature of crypto regulations in recent weeks.
While the super PAC group is focused on congressional candidates for the moment, it’s likely that the major investment has drawn a line in the sand for incumbent President Biden ahead of the presidential elections this November.
It’s also possible that recent Ethereum ETF approvals by the SEC could be signaling a more welcoming climate for crypto projects overall, further softening Biden’s stance. With crypto becoming increasingly integrated into mainstream institutional finance, the proposed SEC regulations would likely have wider ramifications throughout the financial industry that the Biden administration may not have foreseen.
What can crypto expect from a re-elected President Biden?
While Biden’s recent engagement with members of the crypto industry has been warmly received and taken as a potential change in tone regarding regulations, there is no cause for celebration yet for crypto users.
It’s possible that the situation will be kept on ice until the election, where a victorious Biden would be in a much stronger position in terms of supporting harsh regulations without blowback.
For now, all eyes are on the Biden administration to see whether new statements will be issued to provide more clarity on the current stance towards crypto tax and custody and crypto.news will be monitoring the situation closely.
