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Jeff Stein, Cat Zakrzewski, The Washington Post (c) 2024
Vice President Kamala Harris is signaling support for expansion of the cryptocurrency industry in the United States, attempting to rebuff claims that she would seek a crackdown on the rapidly growing but controversial sector.
In a speech in Pittsburgh about the economy on Wednesday, Harris said it was important for the United States to maintain its dominance in blockchain technology, which facilitates trade of cryptocurrencies such as bitcoin. The Harris campaign on Wednesday also released a policy document that said she will would “encourage innovative technologies like AI and digital assets,” a reference to cryptocurrencies and similar technologies such as stablecoins. Harris had on Sunday promised donors in New York City a “safer business environment” for digital assets, as well.
Harris has not detailed a specific plan for promoting crypto, and her statements have also affirmed the importance of protecting consumers from predatory practices. But her comments were intended in part to reassure investors nervous that the Democratic presidential nominee would maintain what they view as President Joe Biden’s hostile approach to the sector,said two outside advisers to the campaign who spoke on the condition of anonymity to describe its tactics. The olive branch comes amid a wave of pressure from donors and crypto groups, who have massively stepped up their spending on politics this year, as well as electoral concerns among Democrats about antagonizing the millions of Americans who have invested in cryptocurrencies.
GOP presidential nominee Donald Trump has accused Harris of seeking “the repression of crypto” and being “against crypto,” while himself pledging to end “the persecution” of the industry under Biden and Harris. Trump has aggressively courted crypto investors and sought to raise money from its executives, promising to appoint industry-friendly regulators and implausibly suggesting he would seek to pay down the U.S. national debt in part through crypto. Trump was previously a critic of bitcoin, and his reversal reflects how both parties have warmed to the industry as it has poured hundreds of millions of dollars into lobbying efforts.
Crypto firms have spent more than $119 million on federal elections and are now the dominant corporate political spenders this year, according to a report in August by Public Citizen, a watchdog group.
“Harris is signaling a break from Biden and crypto skeptics without boxing herself into specific policies,” said Aaron Klein, an expert in financial technology at the Brookings Institution, a Washington-based think tank. Klein called it “smart campaigning on an issue that divides Democrats and where Trump is trying to make a play.”
Harris’s comments on the industry follow a fierce push by its allies to get the Democratic presidential nominee to constrain the crypto regulation of Biden’s appointees. Crypto executives have focused their ire on Biden-appointed Securities and Exchange Commission Chair Gary Gensler, who has warned that the industry’s history of “failures, frauds, and bankruptcies” indicate many players don’t play by the rules. In 2023, the agency brought 46 enforcement actions over digital assets, a 53 percent increase from the previous year, according to an analysis by Cornerstone Research.
Harris has thus far declined to say whether she would keep Gensler in place, but allies have seen cause for optimism for a break with Biden. Mark Cuban, the billionaire who has become a key surrogate for the Harris campaign in the business community, has said Harris’s campaign was listening closely to crypto investors and wrote in an email Wednesday that her latest remarks were in “the right direction.”
“She talked about blockchain, which answers a lot of questions about crypto,” Cuban told reporters in Pittsburgh on Wednesday. Cuban also told reporters on a Harris campaign press call: “She wants us to continue to be a technological leader in AI and crypto technologies and more. And I think that is a very significant positive.”
But Harris faces countervailing pressure from some Democratic economists who view cryptocurrencies as ripe for greater regulatory scrutiny and providing little upside.
“This is just gambling. … I don’t think we need to make it easier to do illegal transactions – blackmailing, drug dealing, whatever,” said Dean Baker, an economist at the Center for Economic and Policy Research, a left-leaning group. Baker said while he understands Harris “doesn’t want to alienate the crypto folks … the government should not be encouraging speculation in this stuff.”
Meanwhile, those hoping for Harris to do more to signal her support for crypto may be disappointed.
“The statement is pablum, but shows her campaign staff are taking meetings with the industry. A real signal the vice president could send to crypto would be to say she looks forward to appointing a new SEC chair during her first term,” said Niki Christoff, a tech consultant with crypto clients.
Harris has narrowed Trump’s lead on the economy in polls, and her speech in Pittsburgh was cast as establishing her support for capitalism and close ties with business leaders. Whether that will prove persuasive to the crypto industry, however, probably won’t be clear until after the election. Tech lobbyists are hopeful that Harris’s extensive ties to Silicon Valley will result in improved relations between the tech industry and Democrats, after years of escalating tensions.
“Biden’s crypto policy has been driven by Gensler and [Democratic Sen. Elizabeth] Warren, who have rejected setting clear rules because that would validate that crypto is here to stay,” said Adam Kovacevich, the CEO of the liberal tech industry trade group Chamber of Progress. “This is the clearest signal yet that Harris wants to reject that strategy and instead regulate crypto to protect consumers.”
