BitOoda Regulatory Analysis, 11/9/20: Early forecasts for the new administration’s impact on the U.S. digital asset landscape

With the presidential election outcome now decided, we at BitOoda wanted to share some of what we’re hearing and thinking in terms of early forecasts of the potential implications of the Democrats’ return to the White House. Of course, there is much that the D.C. crypto community does not yet know about the new administration’s plans, but we already are getting questions from our clients and partners about what to look out for in the coming weeks and months, and some of the key areas and decisions that may have the greatest impact on the digital asset landscape.

We offer three overall takeaways at this early stage:

1. Neither the President-elect nor the Vice President-elect have made any direct statements regarding their views on Bitcoin or cryptocurrency; therefore, we assess the key drivers of U.S. digital asset policy in the next administration will largely depend on those appointed to key cabinet and agency leadership posts.

2. Given the trajectory of the pandemic and the resulting impact on the broader economy, we doubt crypto will be a high priority in the new administration’s first year. Likewise, with at least some turnover in Congress, we would be surprised to see real movement on any of the legislative proposals that have been introduced to date.

3. The outcome of the battle for the Senate will impact the size and timing of the next pandemic stimulus package and other economic recovery decisions, which obviously will influence broader market trajectories to include digital assets. We are in wait-and-see mode in terms of the details of the new administration’s economic response plans and how they may affect crypto markets and prices.

New Leadership & Key Regulatory Topics

Biden’s choices for key posts will have a significant impact on the trajectory of the U.S. digital asset regulatory landscape. We have seen the acceleration of regulatory initiatives in the past few months across U.S. agencies and would not expect a reversal of the progress made in areas such as enforcement against unregulated platforms operating in U.S. markets. That said, the new leadership will bring new strategies on a range of issues, which could either redirect or retain the current financial regulatory approach at the national and agency-specific levels.

· A big question for the digital asset ecosystem is who will replace Jay Clayton as SEC Chair. It is too early for names to begin circulating for this position (early prognosticators are focusing mainly on the cabinet posts). When potential candidates start emerging, we are eager to hear whether they would plan to cohis conservative approach on issues such as the approval of a Bitcoin ETF, as well as the coordination of a coherent regulatory approach to DeFi, a relatively new vertical that we expect regulators under a Democratic administration to carefully scrutinize.

· Ditto for the next Chair of the Federal Reserve, who will be faced with the looming question of how the U.S. should proceed with regard to the Digital Dollar.

· Along those lines, early indications are that Fed Reserve Governor Lael Brainard is the frontrunner for Treasury Secretary. If true, we would consider her nomination as bullish for the space, given her strong role in the Fed’s CBDC efforts to date and her understanding of digital assets.

· The other key name we are seeing in circulation is former CFTC Chair Gary Gensler, who is in line for an advisory position overseeing the financial sector. Gensler is pro-crypto and blockchain-savvy, having taught courses at MIT on Bitcoin and written an op-ed for CoinDesk.

Global Leadership & Multilateral Cooperation

With a potential shift away from President Trump’s isolationist foreign policy, U.S. allies around the world already are indicating their expectation that the U.S. will reassert its leadership on the world stage. Whether that will translate into greater global action by the U.S. on economic digitization and coordinated multilateral policy action on digital assets remains to be seen, but we believe several foreign policy angles are worth watching, including closer engagement with a post-Brexit Europe and the U.K. on crypto regulatory standards, and potential collaboration with India or other emerging markets, possibly as a hedge against China’s aggressive pursuit of its CBDC and national blockchain network.

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