With the Republican Party solidifying its ticket for the Presidential race with the addition of J.D. Vance, there is yet another pro-crypto politician setting sights on the White House in 2024. In addition to another pro-crypto individual entering the race, the SEC is inching ever closer to authorizing spot ether ETF products, which would represent another large scale shift in the cryptoasset landscape in 2024. Highlighting this pivot and shift in attitude are recent comments from Blackrock head Larry Fink, who commented that his past statements on bitcoin were incorrect, and that bitcoin provides important diversification for asset managers. Notably it also appears the real-world-asset tokenization – of which Blackrock has made bold predictions about – is outperforming other cryptoassets in 2024 so far.
With this surge in positive momentum and sentiment it would seem that crypto investors and advocates could rest easy that the crypto market is in good hands. As tempting as that seems, however, it is always important to have reasonable expectations, realistic plans, and logical methods of achieving these desired outcomes. Given that crypto continues to increase in profile from both sides of the aisle, and looks set to be at least part of the conversation as the race for the White House heats up, what are some wish-list items that should be kept in mind?
Stablecoin Policy
A long awaited and much discussed goal for the crypto community has been some sort of policy or comprehensive legislation around stablecoins, which makes sense from a number of perspectives. First, stablecoins provide an easier-to-understand on-ramp via lower volatility and connections to TradFi assets, for individuals and institutions seeking to gain exposure to cryptoassets, than other options. Second, TradFi firms have readily embraced stablecoins, with multiple firms having issued native stablecoins. Lastly, this is an area that makes sense from a banking perspective as well given the implications of stablecoin transactions.
Given that the U.S. dollar is being challenged in its role as the global reserve currency by multiple nations, that tokenized transactions are cheaper and faster versus existing options, and that the vast majority of stablecoins are backed on a 1:1 basis by the U.S. dollar stablecoin policy makes sense from every perspective. Establishing solid policy in this space would benefit all investors and advocates in the space.
Bitcoin Policy
A wish list item that might be less possible in the short-term is the establishment of a U.S. strategic policy for bitcoin. With nations like El Salvador having a several years head start in this area, and deciding to physically store the private keys to state-owned bitcoin holdings within the borders of the nation, there is precedent for the U.S. to develop and enact similar policies. Similar to how private corporations diversify holdings of assets, establishing and maintain diverse revenue streams, and allocate funds toward future possibilities, nation-states have similar responsibilities.
With supporters such as Senator Lummis (R-WY) the potential for – if not a strategic bitcoin reserve – at least a strategic bitcoin policy, is one that should be on the wish list of every crypto advocate and investor. Even the process of having the conversations and making the investments necessary to enact such a reserve or policy would accelerate broader policy discussions around crypto, tokenization, and the digitization of financial services.
Bitcoin might not have succeeded as the global reserve currency of the future, but it still has an important role to play in how crypto policies and investments and direct moving forward.
Renewable Energy And Crypto Policy
Labeling this item as a wish list item might seem an interesting choice since it combines two of the most intensely debated topics – bitcoin and renewable energy – into one option. Setting aside some of the rhetoric reveals that these two concepts are not nearly as far apart as they might initially appear, and can actually aid each other grow. Renewable energy or non-fossil fuel energy sources is already a policy priority in the United States and that seems unlikely to change anytime soon. Even short-term divestments or new investments into fossil fuel production seem closer to short-term events than major policy pivots.
Cryptoassets, but especially bitcoin, have a documented track record of not only utilizing non-fossil fuel energy resources, and as serving as a grid management tool during periods of higher-than-forecasted demand. As demand for electivity continues to increase, due to a number of different industries and business applications utilizing AI, the focus on real-time, responsible, and effective grid management is only ser to become more of a priority. Since crypto operations already tend to be green, it makes policy sense to see how these two areas can work together.
Crypto is coming to Washington in a big way, potentially setting the stage for some of these wish list items to come true.
