Veriscope Regulatory Recap — 16th May to 31th May
Welcome to the latest issue of the Veriscope Regulatory Recap. This edition unpacks the shifts in the US crypto regulatory landscape as the 2024 presidential elections draw near, highlighting how these changes could impact users and the broader crypto market.
Crypto is Now a Major Election Issue
With crypto now a hot topic in the US political scene, presidential candidates have reportedly started warming up to it.
Take Presidential candidate Donald Trump, for instance. Once a Bitcoin skeptic, calling it a “scam” in 2021, the former US President is now promising to protect citizens’ rights to own BTC and “stop Joe Biden’s crusade to crush crypto.”
He has made several other promises, including supporting the right to self-custody, ensuring the future of BTC remains in the US, opposing the creation of a CBDC, and advocating for the release of Silk Road founder Ross Ulbricht.
Additionally, Trump’s campaign has begun accepting crypto donations, and his crypto holdings have now surpassed $10 million.
As a result, Trump’s potential return to the White House is being seen as “broadly positive” for crypto.
In response, President Joe Biden also made a surprising shift as his re-election campaign began consulting crypto industry players for advice on “crypto policy moving forward.”
These outreach efforts, however, started just a few weeks ago, shortly after the Biden administration announced it would veto the SAB 121’s repeal, a bill that discourages banks and financial institutions from offering crypto custody services.
Change in Voters’ Crypto Perception
This growing political engagement with crypto is also shaping public opinion.
A recent Grayscale survey reveals a shift in how voters view crypto’s role in politics. Conducted by The Harris Poll from April 30 to May 2, the survey polled 1,768 adults planning to vote in the upcoming election.
The results highlight a cautious approach among potential investors: 44% of US voters who currently don’t own any crypto stated they are “waiting on additional policies and/or regulation” before making a purchase.
Millennial and GenZ voters, in particular, are strongly interested in crypto, with 62% seeing it as the “future of finance.”
SEC Approves Spot ETH ETFs
In a surprising move, the securities regulator approved 19b-4 applications from BlackRock, Fidelity, ARK 21Shares, Franklin Templeton, Grayscale, VanEck, Bitwise, and Invesco Galaxy for Spot Ethereum ETFs last week.
What makes this interesting is that it happened despite the SEC considering Ether security, according to several reports.
Spot Ether ETFs, however, won’t begin trading yet as they await the necessary S-1 registration approvals. This process is expected to take a few weeks to a few months.
Crypto-favorable Bill also Approved
Another recent significant development is the approval of the Financial Innovation and Technology for the 21st Century Act (FIT21) by the US House of Representatives. This act establishes a new legal framework for cryptocurrencies, aiming to provide regulatory clarity and promote growth.
The bill also gives the CFTC the regulatory authority to regulate crypto as a commodity when it runs on a decentralized blockchain and clarifies the jurisdictional boundaries between the SEC and CFTC over digital asset markets.
The bill was approved with a bipartisan 279–136 vote (with 208 Republicans and 71 Democrats voting in favor) despite the SEC Chairman Gary Gensler warning about “new regulatory gaps,” financial risks, and the bill undermining “decades of precedent regarding the oversight of investment contracts.”
Wisconsin’s Pension Funds Invests in Bitcoin ETF
Another interesting development came from Wisconsin, where the state-owned Wisconsin Pension Fund recently ventured into the cryptocurrency market by investing $180 million in a Bitcoin ETF. This move, constituting 0.1% of its total assets, represents a significant step towards integrating high-risk, potentially high-return investments into a traditionally conservative portfolio.
According to Marquette University’s David Krause, this strategic allocation not only introduces diversification but serves as a trial to gauge public reaction and could potentially act as an inflation hedge, thus redefining traditional investment strategies for pension funds.
Moreover, this approach might just set a precedent, prompting other US pension funds to consider similar investments in the evolving asset class of digital currencies.
Concluding Thoughts: What’s Ahead?
As we wrap up this edition of the Veriscope Regulatory Recap, it’s clear that political support for crypto in the US could reshape the industry both here and globally. With key elections coming up and significant laws being passed, the future looks promising for wider crypto adoption. How these changes affect the global market will be something to watch.
About Veriscope
Veriscope, the compliance infrastructure on Shyft Network, empowers Virtual Asset Service Providers (VASPs) with the only frictionless solution for complying with the FATF Travel Rule. Enhanced by User Signing, it enables VASPs to directly request cryptographic proof from users’ non-custodial wallets, streamlining the compliance process.
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