The election results are a toss-up: What changes would Harris bring to the cryptocurrency industry if she takes office?

Author: Alvis, Mars Finance

With the 2024 U.S. presidential election approaching, the tension in the capital markets has reached a critical point, and the cryptocurrency market is particularly on edge. This year, Trump, who has survived a life-and-death crisis, is campaigning vigorously, and his bold statement of "making America the crypto capital" has instantly ignited enthusiasm in the crypto community. However, history repeatedly reminds us that subtle changes in policy often become a watershed for the market.

Looking back at Roosevelt's "New Deal" after he took office in 1933, the economic rules in the U.S. were completely reshaped overnight, forcing a large number of companies to adapt to the new policy direction, reshuffling the market landscape. This time, the cryptocurrency industry may be facing a similar fate. With Harris steadily advancing in her campaign, her and Biden's highly consistent policy stance suggests that the current government's anti-crypto regulations may continue to intensify. For a crypto market that advocates freedom and decentralization, this policy direction may be a true test of life and death.

So, if Harris is elected, what will the future of cryptocurrency look like? What significant opportunities might arise? We will delve into these questions for a deeper analysis.

According to data from the prediction site Polymarket, Trump's probability of winning is currently 62.5%, while Harris's chances are only 37.5%. Although the prediction market believes Trump has a higher chance of winning, a poll by Forbes on October 31 shows that Harris leads Trump by a slim 1% nationwide, and 10% of voters may change their stance before the election.

In the seven key swing states that will determine the election outcome, Harris's support rate is 49%, slightly ahead of Trump's 48%. Just a week ago, Trump was leading Harris in these states with 50% to 46%.

Therefore, despite many crypto supporters being more optimistic about Trump's election, Harris still has a chance to succeed.

Historically Underdog Presidents Who Ultimately Made a Comeback

Throughout American history, there have been multiple instances where candidates who were not favored in the early stages of the campaign, or even underestimated by polling data, ultimately made a successful comeback.

· In 1948, Truman was one of them. Polls showed he was trailing behind Republican candidate Thomas Dewey. Media and polling agencies even prematurely announced Dewey's victory, with some newspapers printing headlines like "Dewey Defeats Truman." However, Truman launched a series of intensive campaign activities, directly engaging with voters and emphasizing the Democratic Party's achievements in economic and social policies, ultimately winning the election. This election is considered a classic case of polling failure.

· In 1992, Clinton was also not a popular candidate within the Democratic Party during his campaign. He faced a slump early on due to a series of negative reports and scandals, with many experts predicting he would struggle to make it to the end. However, due to his flexible campaign strategy, ability to communicate with the public, and the economic difficulties at the time, he gradually gained support. Ultimately, he defeated incumbent President George H.W. Bush and third-party candidate Ross Perot in a three-way race.

· In 2016, Trump himself also staged a major turnaround. When he ran, he was seen as a "hopeless" candidate in the Republican primaries and was severely underestimated by mainstream polls during the final battle against Hillary Clinton. Throughout the campaign, Trump garnered substantial support from voters, particularly in swing states, thanks to his strong populist style and appeal to the American working and middle classes, ultimately winning the election.

Thus, it seems that before the voting results are truly revealed, one should not jump to conclusions. Just as Bitcoin faced black swan events during its most bullish phases, no one can foresee the final outcome of the election in advance.

Harris's Election: Disaster or Market Adjustment? Market Opinions Are Polarized

First, we must acknowledge that if Harris is elected, there is a high probability that she will continue the policy tone set during the Biden administration. At this moment, the feelings of cryptocurrency investors are somewhat like a roller coaster.

Analysts from the renowned firm Bernstein have predicted that if Harris wins, Bitcoin's price may see a significant decline by the end of the year, potentially dropping by 10%.

On the other hand, seasoned crypto trader Crypto Rand remains much calmer. He believes that regardless of who takes over the White House, the overall direction of the crypto market will not change; a bull market will eventually arrive, although the road may be bumpy.

So, there are two key points here: first, Biden-style policies are unfriendly to cryptocurrencies, and second, the market is speculating whether Harris will intensify regulation, leading to greater uncertainty.

Crypto Rand states that even so, Bitcoin could bottom out and rebound by 2025, leading the entire market into a new bull cycle. These predictions are not unfounded, as both Bitcoin and altcoins have already experienced significant volatility as a norm in the crypto market. For some steadfast supporters, this is merely a short-term fluctuation and does not represent a reversal of the overall trend.

Continuation of Regulatory Policies: Gary Gensler's "Enforcement Regulation" and the Biden Administration's Regulatory Path

To accurately predict Harris's policy direction, we need to understand how the Biden administration has treated cryptocurrencies. Since Biden took office, the U.S. Securities and Exchange Commission (SEC), under the leadership of current Chairman Gary Gensler, has adopted an "enforcement regulation" model, especially against the cryptocurrency industry, showing no mercy. The SEC has not only sued major exchanges like Binance and Coinbase but has also thoroughly investigated unregistered cryptocurrency securities. There is a widespread belief in and out of the market that Gensler's regulatory approach is characterized by a clear high-pressure stance, as he has single-handedly become the "guardian of order" in the crypto market, but his methods have also sparked considerable controversy, with some accusing him of being a "disruptor" of the market.

Here is a chronological review of some regulatory bills and enforcement actions from early 2021 to 2024 during Biden's term:

2021

· March: The Financial Crimes Enforcement Network (FinCEN) under the U.S. Treasury proposed strengthening anti-money laundering (AML) and "know your customer" (KYC) requirements for cryptocurrencies to curb their use in illegal activities.

· August: The Commodity Futures Trading Commission (CFTC) sued the cryptocurrency trading platform BitMEX, accusing it of failing to implement appropriate AML and KYC measures. Ultimately, BitMEX agreed to pay a $100 million fine and reached a settlement with the CFTC.

2022

· February: The SEC sued the crypto lending platform BlockFi, accusing it of failing to register its yield account products as securities. Ultimately, BlockFi agreed to pay a $100 million fine.

· March: President Biden signed an executive order on digital assets, requiring federal agencies to coordinate the development of a regulatory framework for cryptocurrencies aimed at protecting consumers, maintaining financial stability, combating illegal activities, and exploring the potential for a U.S. central bank digital currency (CBDC).

· June: The U.S. Department of Justice established a national cryptocurrency enforcement team, which immediately intervened in several cases, including tracing cryptocurrency assets from the "Silk Road" illegal trading platform and assisting in tracking international illegal transfers of crypto assets.

· September: The U.S. Treasury released three reports on digital assets, focusing on the risks of cryptocurrencies in illegal finance, consumer protection, and payment systems, further clarifying the government's regulatory stance on cryptocurrencies.

· October: The SEC began investigating the NFT project Bored Ape Yacht Club (BAYC) under Yuga Labs due to concerns that its tokens might involve unregistered securities sales.

· December: Following the FTX bankruptcy incident, the CFTC, SEC, and Department of Justice jointly launched an investigation into FTX to determine whether there was misuse of customer funds, illegal misappropriation, and fraud.

2023

· May: Bipartisan members of Congress proposed the "Cryptocurrency Tax Fairness Act," suggesting the implementation of capital gains tax exemptions for small transactions to promote the everyday use of cryptocurrencies and ensure the industry is not stifled by complex tax systems.

· August: The SEC sued major cryptocurrency exchanges Binance and Coinbase, accusing them of not being registered as securities exchanges and classifying some crypto assets as unregistered securities. This action by the SEC is seen as a comprehensive cleanup of the cryptocurrency market, particularly imposing stricter compliance requirements on trading platforms that do not meet securities law regulations.

· September: The Biden administration expressed its intention to further scrutinize all crypto assets using proof-of-stake (PoS) mechanisms, intending to define them as securities. The SEC began to strengthen its regulation of PoS assets like Ethereum, stating that their voting rights structure is similar to that of traditional stocks and may need to comply with securities laws.

· November: Binance agreed to pay a $4.3 billion fine to settle the U.S. government's years-long investigation. Binance admitted to engaging in activities related to money laundering, unlicensed remittances, and violations of sanctions. Meanwhile, founder Changpeng Zhao (CZ) admitted to failing to maintain an effective anti-money laundering program and resigned as CEO.

2024

· April: Zhao Changpeng was sentenced to four months in prison by a federal court in Seattle for violating U.S. anti-money laundering laws (he has since been released).

· May: The U.S. House of Representatives passed the "21st Century Financial Innovation and Technology Act" (FIT21), laying the legal foundation for the regulation of digital assets and further clarifying the regulatory responsibilities of the CFTC and SEC, especially in the management and supervision of crypto assets and digital financial products. The FIT21 bill is seen as a significant foundational step for federal-level digital asset regulation.

· June: The U.S. Treasury issued a final rule requiring all cryptocurrency platforms to report user transaction details to the Internal Revenue Service (IRS) starting in 2026, aiming to tighten regulation of cryptocurrencies in the tax domain and reduce tax evasion.

These events and bills undoubtedly indicate that the Biden administration's overall attitude towards cryptocurrencies leans towards strong regulation. Under Gary Gensler's leadership, the SEC has adopted an "enforcement regulation" approach, placing the cryptocurrency industry under a stricter legal framework, requiring market participants to comply with compliance standards.

It is worth noting that Gary Gensler's future role is currently uncertain. Although Trump has promised to fire Gensler on "day one" if elected, he cannot legally decide the fate of the SEC chairman directly. Harris has not yet made a formal statement on Gensler's reappointment, and market analysts generally believe that Gensler's "enforcement regulation" strategy may face resistance.

Renowned cryptocurrency analyst Crypto Rand bluntly stated that Gensler's policies are "the biggest burden on the U.S. cryptocurrency industry."

Rashan Colbert, policy director at the decentralized exchange dYdX, also pointed out that if the new government can replace the SEC chairman, it would signify the end of overreach in enforcement and harmful regulation, potentially aiding the compliant development of the crypto market.

Billionaire investor Mark Cuban has also expressed doubts about Gensler's enforcement approach, believing that Harris's team tends to oppose the "enforcement regulation" model and hopes to promote the development of the crypto market through clear regulatory frameworks.

Cuban noted that Harris "prefers clear regulatory provisions rather than relying on litigation," which would allow companies to avoid moving overseas to develop applications.

Other industry observers believe that even if Harris replaces Gensler, the enforcement intensity in the cryptocurrency market will still not diminish. Venture capitalist Tim Draper further called for a complete update of U.S. securities laws, pointing out that the current Howey Test was established 80 years ago and is no longer suitable for the "dynamic, growing modern market environment." The real breakthrough lies in whether more transparent and clear regulations can reduce industry uncertainty. This is of great concern in the market, as a clear regulatory framework can help businesses and investors make more stable arrangements, rather than feeling like they are walking a tightrope every time a policy is released.

Global Liquidity and Market Opportunities: Will Loose Monetary Policy Become a Bull Market Catalyst?

Yang Youwei, chief economist at Bit Mining, pointed out that if Harris is elected, cryptocurrency investors should pay special attention to monetary liquidity in the global economy.

Here’s the key point: Will the so-called "hot money" flow back into the crypto market again, becoming a catalyst for a new bull market? Yang Youwei's view is clear: the looser the monetary policy, the greater the likelihood of funds flowing into the crypto market. Considering the current global economic uncertainty and the generally loose policies adopted by central banks, the inflow of hot money could indeed bring more market opportunities.

Correlation between Bitcoin prices and global liquidity. Source: Lyn Alden

Supporting this view is cryptocurrency entrepreneur Erik Finman. He believes that if the Federal Reserve adopts a more accommodative stance under Harris's leadership, then even with regulatory challenges, increased market liquidity will still support prices. In other words, the further Harris's policies go down the path of "loose money," the greater the potential for a bull market in the crypto space.

However, all of this hinges on whether the U.S. can withstand greater inflationary pressures. It is foreseeable that if Harris attempts to continue implementing loose policies, she will inevitably face considerable fiscal pressure and market resistance. In this scenario, businesses and investors must be wary of the volatility risks in the crypto market and cannot easily ignore the chain reactions brought about by monetary policy.

Lack of Clear Policies Sparks Panic: Will the U.S. Crypto Industry Be "Geofenced"?

For many participants in the crypto market, a significant flaw of Harris is her ambiguous attitude towards cryptocurrencies. In September of this year, Harris publicly stated for the first time that her government would encourage investment in artificial intelligence and digital assets to maintain America's competitiveness. However, it is evident that such statements lack detail and do not provide reassurance to the market. This ambiguity has led many to worry that she may continue Biden's hardline approach, thereby increasing market uncertainty.

Venture capitalist Tim Draper pointedly noted that "fear" has already begun to spread in the industry, especially among smaller crypto companies that are more sensitive to uncertainty. Rather than lingering in the U.S. regulatory policy, an increasing number of companies are choosing to go overseas in search of a clearer policy environment. Currently, countries like Dubai and Singapore have more lenient and clearer policies than the U.S., and the phenomenon of "geofencing" in the U.S. is emerging.

Colbert, policy director at the well-known decentralized platform dYdX, further added: "Other countries are moving faster than the U.S. If the new U.S. government is unwilling to remain competitive in the cryptocurrency space, this trend will continue." Even if the Harris administration relaxes policies in some areas in the future, the lack of systematic and clear regulations will inevitably push innovators towards more inclusive markets.

The 2024 Henley Cryptocurrency Adoption Index ranks the top 10 countries. Source: Henley & Partners

The investment immigration consulting firm Henley & Partners released the "2024 Henley Cryptocurrency Adoption Index," ranking the cryptocurrency adoption status of different countries, placing the U.S. behind the UAE, Hong Kong, and Singapore.

Despite this, most large cryptocurrency companies have not left the U.S. Although regulatory attitudes have been unfriendly in recent years, the U.S. market is simply too enticing for many crypto enterprises to abandon.

It appears that if Harris is elected president, the market will clearly need clear and strong policy signals to stabilize investor confidence. The current chairman of the U.S. Securities and Exchange Commission has sparked widespread controversy with his tough regulatory approach, and the market generally expects that Harris may appoint new leadership after taking office to alleviate industry dissatisfaction.

But the real challenge lies in whether the Harris administration can find the ideal balance—protecting the fundamental safety of the market while promoting the vigorous development of the industry. Under a more accommodative monetary policy, if a stable policy environment can be provided, the potential of the crypto market will undoubtedly be unleashed.

Dogecoin and Crypto "Pump King" Musk Amid Market Volatility

In the tumultuous world of cryptocurrencies, Dogecoin has always been an "outlier." Unlike mainstream crypto assets like Bitcoin and Ethereum, Dogecoin not only exhibits high volatility but also carries a sense of jest and self-mockery. Who would have thought that this cryptocurrency, initially a joke, would spark a global frenzy under Musk's influence? And this "pump king" Musk has long become the spokesperson for Dogecoin, frequently bringing it into the mainstream spotlight through personal tweets and Tesla's financial management, effectively paving a broad path for this niche project with his personal influence.

Dogecoin's price surged by as much as 80% in the past month.

So the question arises: if Trump wins the 2024 U.S. election and Musk takes charge of the so-called "Department of Government Efficiency" (DOGE), the Dogecoin market will undoubtedly become even more lively. But what if Trump loses and Harris is elected?

Harris's policy stance has always been vague, which is not good news for the cryptocurrency market, especially for the highly emotional Dogecoin investors.

Crypto analyst Crypto Rand predicts that if Harris successfully takes office, panic in the market may spread rapidly. Since Dogecoin investors tend to be more driven by short-term emotions, once policies are unclear, the market may enter a short-term sell-off mode. In other words, Dogecoin's price is likely to experience a "free fall," and if this panic sentiment is not resolved in time, it could lead to deeper market volatility.

Musk: Aligning with Trump and His "Puppet Theory" on Harris

Returning to Musk, his performance in this election is also quite eye-catching. As the "pump king" in the tech circle who dares to speak and act, he has clearly aligned himself with Trump this year, even spending millions of dollars to support his campaign. By setting up high-stakes prize draws, he aims to encourage more voters to participate, especially in key states where the election is tight. This Tesla CEO not only uses his social media influence to rally support but also directly supports the campaign through the American Political Action Committee (PAC), going all out to stand by Trump.

Even more provocative is Musk's view of Harris. In public, Musk has unreservedly referred to Harris as a "puppet," stating that she lacks real decision-making power. In his statements, Harris is seen as a "front-stage puppet"—a political tool devoid of substantive decision-making authority. Musk's actions, as a top billionaire in America, to fully align himself with Trump are extremely rare in U.S. history, leading him to express that "if Trump fails this time, I might be arrested and lose everything."

The "Emotional Panic" in the Dogecoin Market and Future Risks

Compared to Bitcoin and Ethereum, Dogecoin's market structure is more reliant on emotional direction. Once investor confidence wavers, it can easily lead to a massive sell-off. In the past, with Musk's backing, Dogecoin's price often fluctuated rapidly in a short period. However, if Harris takes office and policies remain unclear, whether Musk's influence can be sustained remains a question mark.

Especially with Tesla's third-quarter financial report coming out, showing a gradually stabilizing financial performance and unchanged Bitcoin holdings, whether Musk's enthusiasm for Dogecoin will be affected by the political situation has also become a market focus.

If Trump loses, the political pressure on Musk will sharply increase, and his personal activity in the cryptocurrency market may significantly diminish. This is clearly not good news for Dogecoin. After all, Musk's support is a crucial reason for Dogecoin frequently making headlines in the public eye. Once his "pump" effect fades, Dogecoin's price may enter a phase of emotional-driven volatility, even posing further downside risks.

Conclusion: Unclear Policies + Market Turbulence, Dogecoin Must Beware of "Double Whammy"

In summary, the unclear policies after Harris's election, the risk factors of Musk aligning with Trump, and the instability of investor sentiment all make the future of Dogecoin uncertain. Dogecoin's future may very well be pulled between Harris's policy tone and Musk's personal influence. For investors, especially short-term speculators, it is crucial to be wary of changes in market sentiment and not to chase highs and sell lows easily, lest they fall into unnecessary risks.

In conclusion, this 2024 election not only determines the political landscape of the U.S. for the next four years but may also become a watershed moment for the fate of Dogecoin and Musk.

Future Outlook: If Harris Really Becomes President, Will She Reshape the Crypto Market Landscape?

With only four days left until the U.S. election voting day, regardless of who takes over the White House, volatility in the crypto market seems inevitable. In the short term, strict regulatory controls or the benefits of loose monetary policy will merely be a peak or trough in the market wave; in the long term, the direction of the crypto market will not change because of this, but the path will become more tortuous and unpredictable.

As for where the future of cryptocurrencies will head, only time will tell.