(Kitco News) – The upcoming midterm elections in the United States are garnering more attention than the typical off-year election that doesn’t include a Presidential race for a variety of reasons, including abortion rights, the prospect of a nuclear world war and the fledgling economy.
With inflation and the economy coming in as the top concerns for citizens in the U.S., all issues that relate to financial matters have become focal points, including cryptocurrencies.
The events of 2022 – including the implosion of Terra/Luna and the value draining that followed – have finally managed to motivate U.S. politicians to get serious about regulating the rapidly growing digital asset sector. Still, how that regulation will look depends on which party manages to secure power.
With all 435 seats in the House of Representatives up for a vote along with 35 out of the 100 seats in the Senate, the opportunity for one party to secure control of Congress remains a distinct possibility.
Currently, polls show that Democrats hold a slight advantage, but the past few elections saw a similar pattern only to have Republicans outperform expectations. Some attributed this trend to “shy voters” who don’t feel comfortable discussing their political leanings in the increasingly divided environment.
The Republican party is also viewed as better equipped to get a handle on financial concerns, and their focus on lowering crime and empowering police is also attracting voters. The fact that President Joe Biden has a favorability rating of 40% isn’t helping the Democrat’s case. However, likely that the nation won’t have a clear picture of the final legislative makeup until several days after the election is concluded.
The best case currently for the Democrats is that they manage to retain control of at least one house of Congress so that the final two years of Biden’s first term aren’t entirely relegated to “lame duck” status.
Surprisingly, cryptocurrencies are the one area where politicians have been able to craft bipartisan legislation on numerous occasions over the past year. Because of this, voters trust the Republican and Democratic parties equally on the topic of cryptocurrencies according to a recent poll by the Crypto Council for Innovation.
Cryptocurrencies and a Democrat victory
In the event that the Democrats manage to come out on top, it’s unclear how the cryptocurrency market will be affected. Several party members are hyper-critical of the digital asset class, including Senators Elizabeth Warren and Sherrod Brown.
When discussing Fidelity’s decision to allow pension holders to allocate some of their holdings to crypto, Warren slammed the decision, warning that “Bitcoin’s volatility is compounded by its susceptibility to the whims of just a handful of influencers.” The top crypto’s plunge from nearly $70,000 to sub $18,300 in June only served to highlight Warren’s concerns.
President Biden advanced his framework for dealing with cryptocurrencies in September following his March executive order that outlined the government’s plans for the “responsible development of digital assets,” with a focus on consumer protection.
The framework was widely panned by multiple players in the crypto industry who warned that the recommendations could stifle innovation in the sector. Many also lamented the White House’s focus on the promise offered by central bank digital currencies (CBDCs) while only focusing on the negative aspects of decentralized cryptocurrencies when making comparisons.
While there are several crypto-positive Democrats – including Ritchie Torres and Jim Himes – the party as a whole has largely stood in opposition to cryptocurrencies and is expected to be heavy-handed with the industry if they secure the political majority.
Republicans are more open to crypto exploration
Republicans, in general, have expressed more openness to cryptocurrencies and blockchain technology due to their preference for a small government that lets people manage their lives more so on their own terms.
The heavily red state of Texas has become a hub for cryptocurrency mining since China outlawed mining operations in the country in July 2021, while the state of Wyoming has achieved a reputation as “one of the top blockchain destinations in the world” for its crypto-friendly legislative positions.
Amid a push by the Securities and Exchange Commission (SEC) to clamp down on the crypto industry back in March, eight members of the Congressional Blockchain Caucus pushed back against the regulator, warning that some of the rules it sought to put in place risked delaying the growth of the crypto industry in the U.S., resulting in it falling behind other, more crypto-friendly nations.
But while Republicans have, for the most part, been more open to cryptos, a victory in November doesn’t mean that crypto-positive legislation would be passed anytime soon. With Democrats in charge of the White House for at least two more years, the most likely outcome of a Republican victory would be legislative gridlock until after the 2024 election.
What the people want
When it comes to what the U.S. electorate wants, a poll of 800 likely midterm voters in the four U.S. swing states of New Hampshire, Nevada, Ohio, and Pennsylvania indicated that a majority are in favor of cryptocurrencies and decentralization.
“The findings from the poll make clear that over 90% of voters express support for an internet that is community-owned, community governed, and gives people greater control over their information,” the report from Haun Ventures said.
A majority of respondents were in favor of the development of a decentralized internet, with 55% of those surveyed indicating that they would be less likely to vote for candidates who oppose policies that enable web3.
“What’s particularly compelling about these findings is that voter sentiment regarding web3 tends to be bipartisan, with independents expressing the strongest views in favor of web3,” the report stated. “As both parties consider how good web3 policy will translate into good politics, the values of web3 are what voters want to see elected officials supporting, not standing in the way of.”
Nearly one in five of the respondents indicated that they currently own cryptocurrencies, meaning that swing states now have more people that hold digital assets than have a union membership.
“In the swing states we surveyed, these ‘Web3 Voters’ lean slightly Democratic, but this issue remains largely bipartisan,” the report said. “On the whole, Web3 Voters believe a decentralized, democratized internet represents economic opportunity, and they see web3 as a positive alternative to Big Tech platforms.”
Those interested in Web3 tended to be younger and more diverse than the population as a whole, and openly expressed that they had little faith in the government’s ability to appropriately regulate the industry.
One takeaway noted by Haun Ventures is that voters interested in cryptocurrencies and Web3 “now represent a significant cohort of the middle-class electorate” in the swing states polled.
“As web3 products and innovations become ever more widespread, and the perils of our current tech paradigm, including the erosion of privacy, data security, and trust, become more evident, we anticipate that even more voters will recognize what is at stake in shaping rules for web3,” the report concluded.
According to the poll conducted by the Crypto Council for Innovation, 84% of those surveyed said a politician’s position on cryptocurrency would be a factor in determining their vote, although the vast majority said it would be minor.
While it may still be early in the life cycle of Web3 and digital assets to play a major role in the upcoming election, the upward trend in adoption suggests that it could become a significant factor in the future and will benefit the party that facilitates the growth of a decentralized internet.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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2022-10-28 21:18:00
