WASHINGTON, DC – JULY 22: Kamala Harris speaks on the South Lawn of the White House. (Photo by … [+]
Two seismic events in 2024 may prove beneficial to investors in blockchain applications and the future of technology innovation in the United States. First, the Supreme Court’s overruling the 40-year-old “Chevron Doctrine” marks the beginning of a process that will restore greater clarity and consistency to the regulatory environment. Second, Vice President Kamala Harris’s rise to the top of the Democratic ticket provides fresh opportunities for her and her party and to fully grasp the importance and vitality of these industries to the U.S. economy and establish, reset, and cultivate relationships with its superlative entrepreneurs and innovators.
Cryptocurrencies and other blockchain technologies have weathered a long period of regulatory uncertainty (and persecution), which has had the effect of stunting innovation and chasing investment dollars to more welcoming foreign shores. Fortunately, in 2024, there has been increasing bipartisan receptivity to the conclusion that these industries have been unfairly demonized by certain regulator and politicians, but should be nurtured instead. Democrats must build on their small, but laudable, legislative efforts this year to provide blockchain innovators the regulatory and legal clarity to develop their networks and expand their research. If the blockchain economy is permitted to grow to its full potential, the benefits to the U.S. economy will be sizeable.
At the Democratic Convention in Chicago this week, Harris and other party leaders should strongly signal their intentions to encourage cooperation between the parties, the branches of government, and private-sector stakeholders in establishing clear, consistent rules to foster development and proliferation of cutting-edge technologies and, in the process, helping secure the United States as the hub of the next generation of technological development.
It may sound a bit far-fetched that Harris – given her past support for economic proposals associated with the far left – would be willing to support the aims of crypto and other blockchain industries. After all, her echoing of President Biden’s argument that corporate greed and price gouging are drivers of inflation suggests she might not be ready to articulate the case for regulatory clarity.
But the media is abuzz with reports and analyses suggesting that Harris is in no way wed to some of the more progressive regulatory views she articulated during her 2020 presidential campaign, when she was battling Elizabeth Warren and Bernie Sanders for attention from the party base. These are different times and Harris has no competing voices (but Donald Trump’s) to worry about. That would give her plenty of scope to come to the center on business concerns, such as regulations.
Harris has already shown herself to be politically astute enough to reverse course on a series of issues that are out of step with public opinion, such as fracking, the Green New Deal and single payer healthcare. In that vein, she should have no difficulty announcing that SEC Chairman Gary Gensler will be out of a job in a Harris administration.
As I described in May, Gensler has waged an old-school, progressive litigation war against crypto for the last four years with the objective of getting judges to expand the SEC’s authority far beyond what the law provides. It hasn’t gone well for Gensler and caused embarrassment for the administration. Judges in a variety of federal courts have issued stinging opinions that slam the SEC’s anti-crypto actions as “arbitrary and capricious” or lacking “faithful allegiance to the law.” In one of Gensler’s crypto lawsuits, a judge sanctioned the SEC for its “gross abuse of power.”
One of Gensler’s biggest embarrassments might be a cautionary tale for Harris. The SEC’s loss in court against Ripple Labs over the company’s sales of the digital asset XRP cost hundreds of millions of dollars over four years where there was no fraud alleged and no victims were identified. In the end, the judge found that most of Ripple’s XRP sales were not securities and rejected the SEC’s demands for disgorgement. The $125 million civil penalty she ordered for a narrow set of unregistered sales by Ripple—where no investor lost money—was only half of the reported $200 million in litigation costs the company had to shoulder.
The Democratic Party is showing signs of greater receptivity to the idea that regulations should hew more closely to the legislative language coming from Congress than to the whims of less accountable and quadrennially fleeting regulatory agencies rubber stamped by the courts. A younger generation of Democrats – many hailing from states with burgeoning technology industries – wants to pass bipartisan legislation to establish new rules for industries that should not be regulated by agencies poorly suited to deal with digital assets. The pro-crypto side is led by Members of the House, such as Ritchie Torres (D-NY), Ro Khanna (D-CA) and Wiley Nickel (D-NC). They have recruited Adam Schiff, the Democratic nominee for U.S. Senate in Harris’ home state, and Senate Majority Leader Chuck Schumer to their cause and formed a group called “Crypto4Harris.” They want Harris to get on board with a bipartisan regulatory framework that Schumer insists could become law by the end of this year.
Whoever controls the levers of government over the next four years will have a tremendous amount of influence over the future of crypto and other blockchain technologies. But unlike so many other issues, the partisan dividing line over crypto and blockchain is fading. Investing in sound policies to foster the growth of ground-breaking innovation industries is an idea that is destined to transcend partisanship. Kamala Harris should make that point this week.
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