President Biden Changes Mind on Crypto: Coincidence?

The wave of pro-crypto advancements in recent weeks indicates that President Biden’s administration is softening its stance on crypto. With crypto set to benefit from the bipartisan support in recent legislative wins, the potentially 180-degree turn could suggest a coincidence or reaction to Donald Trump’s support for the industry.

Reflecting on the Monday news that the US Securities and Exchange Commission (SEC) may approve the spot Ethereum exchange-traded funds (ETFs), implies the Biden administration is softening its stance on cryptocurrency. The approval would constitute a major reversal, especially with the odds against the applications tied to Ethereum, whose status edged closer toward security.

SEC to approve spot ethereum ETFs

Although the approval of spot ETH ETFs is merely a speculation, rumors of the SEC urging applicants to amend filings on an expedited basis portray an odd move if it were to deny them outright. The development suggests a softening stance by Gary Gensler-led SEC and a departure from the recent probes targeting prominent Ethereum-related institutions, including Consensys and Uniswap.

Monday saw Bloomberg Intelligence ETFs analysts Eric Balchunas and James Seyffart jointly upgrade the odds of SEC approving spot Ethereum ETFs from 25% to 75%. The revised forecasts surface when the SEC is expected to decide on VanEck’s application of spot Ether ETF by Thursday, May 23.

A second procrypto development arose last week when the Deploying American Blockchains Act (2023) leveraged bipartisan support to pass with a 334-79 vote. Although the bill is modest in scope, it garnered bipartisan support from the House representatives to enable the Secretary of Commerce to undertake appropriate measures to promote US competitiveness in the blockchain space.

The support for the blockchain-oriented bill precedes the upcoming Senate vote on the Financial Innovation and Technology for the 21st Century Act (FIT21).

The crypto-specific legislation is set to leverage bipartisan support with the House Democratic leaders within the financial services and agriculture committees ruling out whipping against the FIT21 bill. It suggests that though the Democratic leaders are opposed to the bills, they leave members to vote their conscience.

Recent votes in the House of Representatives and Senate garnered bipartisan support to overturn the SEC’s anti-crypto policy, Staff Accounting Bulletin 121 (SAB 121). The legislators defied threats by the President to veto Resolution 109 in its attempt to repeal SAB121, with prominent Democrats such as Finance Committee Chair Ron Wyden (D-OR) and Senate Majority Leader Chuck Schumer (D-NY) voting their conscience to repeal SAB 121.

Biden’s administration on crypto

Whether Biden will live true to his word and veto Resolution 109 is uncertain, especially with the independent Government Accountability Office (GAO) faulting the SEC for inappropriately imposing the SAB 121 guidance.

Nonetheless, the bipartisan support accorded by the bills suggests that crypto rulemaking is achievable despite the opposition from arch-crypto skeptic Democratic leaders such as Massachusetts Senator Elizabeth Warren.

Meanwhile, the recent developments, though positive and critical wins for the crypto industry, constitute discrete events. The Congress is neither the puppet for the White House nor does the SEC’s decision suggest it is an extension of the White House.

The positive developments coincidentally arise when several concerns arise questioning the Biden administration’s anti-crypto stance. However, there exists no reason to assume Biden is directing the SEC’s chair and legislators to ease up on crypto.

The higher probability of spot ETH ETF approval suggests that the securities watchdog resistance arose from a failure to secure productive meetings with applicants. Also, the recent meetings have become fruitful, which hardly implies policy reversal by the SEC.

President Biden reaction to Trump embrace of crypto

President Biden’s administration appears to realize that by Trump embracing crypto, the Republican presidential nominee portrays an oppositional figure that will liberate crypto voters from the repressive policies of the current leadership. Trump, himself doing a 180-turn on crypto, leverages the wedge issue targeting to win over the votes of crypto holders who nearly constitute a quarter of the independent voters.

The Biden administration and Democratic-affiliated leaders could identify with the pro-crypto to secure the key swing vote. The number of voters holding crypto will increase post-approval of spot ETH ETFs coincidentally as the US edges closer to the presidential election in November.

The easiest solution by Biden is to make a 180-degree turn by softening the stance on crypto by forgoing the veto decision to make crypto less of a problem.

The recent developments reveal no direct evidence of Biden reversing course on crypto. Instead, it implies progress in crypto legislation that coincides with the ETH ETFs approval journey.