The big winner of the US election has been determined: cryptocurrency

Analysts believe the cryptocurrency industry will gain a growth catalyst no matter who wins the White House.

The 2022 cryptocurrency crash is a distant memory, with Bitcoin making a comeback at $73,500, up more than 63% so far this year. Dubious platforms like FTX are gone, while industry lobbying and campaign contributions have become a powerful force in Washington, including $130 million in donations to congressional and White House campaigns this election cycle.

Next year's U.S. Congress may be one of the most crypto-friendly ever, with both Trump and Harris saying they are willing to help the cryptocurrency industry achieve the goals it has long been pursuing.

Crypto companies are optimistic. Faryar Shirzad, chief policy officer of Coinbase Global, said: "No matter who wins on November 5, I will remain optimistic about the prospects of the cryptocurrency industry. In areas where the two parties are willing to cooperate, cryptocurrency is an ideal 'candidate'."

Some analysts also believe that this year's US election may become a growth catalyst for Bitcoin and cryptocurrency companies.

The chairman of the SEC, the "enemy" of cryptocurrency, may be replaced

B. Riley Securities analyst Hal Goetsch recently wrote in a research report: "From a regulatory perspective, the 2024 election may be one of the most important moments for cryptocurrency." He believes that if Trump wins, he will introduce more measures to support the cryptocurrency industry. Bernstein Research pointed out earlier this year that if Trump wins, the price of Bitcoin may exceed $80,000, and if Harris enters the White House, the price of Bitcoin will fall sharply, one of the reasons being that she will be slower to relax regulations.

This year's election is particularly important for the cryptocurrency industry because many companies in the industry are targeted by the U.S. Securities and Exchange Commission (SEC). Although the SEC approved the launch of a Bitcoin ETF, SEC Chairman Gary Gensler has remained tough on cryptocurrencies.

For years, Gensler has opposed the formulation of relevant rules in addition to launching lawsuits and regulatory actions against the cryptocurrency industry. Cryptocurrency company executives said that the SEC should formulate rules that provide a clear path for the cryptocurrency industry to not violate the law. The SEC has accused companies such as Coinbase, Kraken and Binance of being unregistered securities exchanges. The proceedings of these lawsuits are currently underway in federal court. These companies say that their operations are completely legal.

If Trump wins, the probability of Gensler leaving office is very high. Gensler's term will end in 2026, but based on past experience, SEC chairmen usually resign when the White House changes hands. Even if Gensler chooses to break tradition and continue to serve as SEC chairman, Trump can immediately promote a Republican to the position of SEC chairman after he becomes president.

If Harris wins, Gensler's fate is less clear. Some major Democratic supporters with ties to the cryptocurrency industry, including Mark Cuban and Ripple co-founder Chris Larsen, have pressured the White House and campaign officials to remove Gensler. However, if Harris is elected president, she already has a long list of official appointments that need to be approved by the Senate, and removing Gensler will give her another headache.

Kristin Smith, CEO of the Blockchain Association, believes that if Harris is elected president, Gensler "will continue to be the biggest risk facing the cryptocurrency industry."

Biden has cracked down on the cryptocurrency industry during his presidency, and what Harris is trying to do is to change the industry's perception that "Democrats are the enemy", but Trump has expressed his full support for the cryptocurrency industry.

In July, Trump said at a major Bitcoin conference that he would "make the United States the global capital of cryptocurrency" and said the United States would begin to retain Bitcoin for strategic purposes. Trump himself has also dabbled in the cryptocurrency field, helping to launch the World Liberty Financial project.

"The Harris-Biden administration has stifled innovation through more regulation and higher taxes, but the cryptocurrency industry knows that President Trump is the only candidate in this campaign who is ready to encourage American leadership in cryptocurrency and other emerging technologies," said Brian Hughes, a senior adviser to the Trump campaign team, in a statement.

According to people familiar with the matter, Harris's involvement in the crypto industry is far less than Trump's, but her campaign officials often contact executives in the crypto industry. In October, Harris launched the Opportunity Agenda project aimed at helping black communities get involved in the cryptocurrency field, which includes a project to "support regulatory frameworks for cryptocurrencies and other digital assets."

Cryptocurrency industry becomes the "financial master" of the general election

The "green light" for cryptocurrencies by both parties in the United States is the result of a lot of lobbying and donations during this year's election cycle. Political action committees funded by companies such as Coinbase, Ripple Labs and venture capital firm Andreessen Horowitz have spent more than $134 million to support candidates who support cryptocurrencies and attack their opponents.

The cryptocurrency industry has already won some major victories before the counting of votes began. A political action committee (PAC) funded by the industry spent $10 million in the California Democratic Senate primary to support the confrontation between Rep. Adam Schiff, who supports cryptocurrency, and Rep. Katie Porter. Schiff has a very good chance of winning the deep blue state of California. The PAC also spent heavily to support Democratic primary candidates Emily Randall in Washington state and Shomari Figures in Alabama, both of whom made the general election.

The cryptocurrency industry wants Congress to pass two key proposals: one to set requirements and standards for stablecoins (cryptocurrencies pegged to the US dollar); and another to isolate most of the crypto market from the SEC's regulatory scope and bring it under the supervision of the Commodity Futures Trading Commission, which is seen as a lighter regulator in the industry.

If Trump is elected president, these proposals are more likely to pass. In May, the U.S. House of Representatives passed a Republican-drafted bill supported by Coinbase and other crypto companies that would set rules for cryptocurrency exchanges and exempt many cryptocurrencies from securities laws if they are decentralized enough. 71 Democrats joined Republicans in voting against Gensler's proposal, which Gensler said would "undermine decades of precedent." Meanwhile, stablecoin legislation has also received bipartisan support.

Even if Harris wins, the legislation is likely to move forward. Smith of the Blockchain Association pointed to the "lame duck" period of the U.S. Congress from November 5 to January 3 next year as a window of opportunity. During this period, although legislation usually faces greater resistance, senior Democrats and Republicans on the House Financial Services Committee and Senate Majority Leader Chuck Schumer believe that the legislation is expected to be passed this year.

One ​​thing to note is that when politicians stop scrambling to raise donations or win votes and turn to the more difficult task of governance, the cryptocurrency industry may see itself being left out a little after the election. There will certainly be a "legislative battle" in 2025, and in such an environment, it will be difficult for proposals from both parties in the United States to be passed.

Which crypto assets are worth paying attention to?

Regulation is just one of the factors that affect the prices of cryptocurrencies and related stocks. In the medium term, the rise and fall of Bitcoin and mining company stocks often depend on macroeconomic trends, such as how quickly the Federal Reserve cuts interest rates. Trump's victory may boost Bitcoin prices in the days after the election, but election models show that this year's election is too close to win.

If the regulatory environment is relaxed, Coinbase (COIN) will be one of the beneficiaries. Mizuho Securities believes that if Gensler is replaced by a more cryptocurrency-friendly SEC head, the company's stock price will be boosted.

However, some analysts have advised investors to wait until the election dust settles.

B. Riley Securities' Gertsch said: "Until the election results are determined, regulatory rules are clear, or until a better catalyst emerges that can provide sustained growth in Coinbase's profits, we expect the company's shares to remain range-bound." Gertsch has a "neutral" rating on Coinbase shares and a price target of $185, about 16% below current levels.