VP Kamala Harris’ stance on digital assets, or lack thereof

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At a fundraiser in New York City in September, U.S. Vice President Kamala Harris publicly expressed her support for emerging technologies, including artificial intelligence (AI) and digital assets.

“We will encourage innovative technologies like AI and digital assets, while protecting our consumers and investors,” she told the Cipriani Wall Street event, according to a report in Bloomberg—related or not to her comments, the event raised $27 million for Harris’ campaign.

It wasn’t so much putting her cards on the table as flashing a quick enough glimpse to at least discern whether they were hearts or clubs.

Since announcing her candidacy for U.S. President, Harris has kept her stance on digital assets and blockchain conspicuously close to her chest. So even this quite general passing reference to the industry was swiftly jumped on by starving policy predictors, commentators, and shareholders in the digital asset space. 

Significantly, her comments have been interpreted as a “promising proof of pivot,” away from a crypto-sceptic Bidon-esque approach to a more “pragmatic” vision of the economy.

During his presidency, Joe Biden made it clear that the digital asset industry is to be controlled not supported, most recently evidenced by his veto of H.J.Res. 109.

The legislation, which garnered support in the House and Senate, would have overturned the controversial Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 121, issued in March 2022, which provided guidance requiring entities that custody digital assets for others (such as banks and financial institutions) to recognize these assets on their balance sheets.

This forced custodians to treat the assets as though they owned them, significantly impacting their accounting practices and capital requirements. However, it isn’t clear how much banks would have to hold against digital assets, which deterred a number of big firms—including BNY Mellon (NASDAQ: BK), State Street (NASDAQ: STT) and Nasdaq—from getting involved in digital asset custody.

Biden and the SEC also released a statement opposing the passage of the Financial Innovation and Technology for the 21st Century (FIT21) Act, a bill ostensibly aimed at providing “clarity” to digital asset regulation, but more accurately, a bill that aims to hamstrung the SEC—perceived as an overly enforcement-happy regulator by the industry.

FIT21 would give the Commodity Futures Trading Commission (CFTC)—seen rightly or wrongly as a softer touch—power over digital commodities while clarifying the SEC’s mandate to oversee digital assets offered as part of an investment contract. The bill also outlines a process for firms to certify with the SEC that their projects are adequately decentralized, allowing them to register digital assets as digital commodities with the CFTC.

Biden’s shunning of the bill further demonstrated his skepticism over digital assets and reluctance to let the industry roam free outside of the SEC’s stringent oversight. 

This, perhaps, explains why Vice President Harris’ relatively ambiguous September 22 comments were grabbed with such hungry enthusiasm by digital asset advocates desperate for a break from Biden’s approach to policy and governance of the space.

What can be inferred from Harris?

Harris’ comments were lauded by optimistic industry supporters within the democratic party. 

Rep. Wiley Nickel (D-NC), a known pro-digital asset Democrat, announced on X (formerly Twitter) that “I’ve been working hard to push for a reset on crypto, and am thrilled about this important policy statement.”

He also highlighted comments from Brian Nelson, Harris’ senior campaign adviser for policy, who reportedly told a Bloomberg News roundtable at the Democratic National Convention in August that “she’s [Harris is] going to support policies that ensure that emerging technologies and that sort of industry can continue to grow.”

This was in response to a question about the vice president’s recent efforts to engage the “crypto community,” and arguably stands as one of the clearest signs yet that a Harris Presidency would “support” the digital asset sector, coming as it did from someone described as “the L.A. lawyer who has Harris’ ear on policy.” 

Yet, even this leaves room for plausible deniability if Harris ends up choosing to continue in the same vein as Biden, as it comes from a third party who doesn’t specifically name-check blockchain or digital assets in his answer.

Another hint at the vice president’s stance came more recently when she unveiled her proposals for what she “will deliver for black men,” another crucial demographic in the election.

Published on October 16, the vice president’s “Opportunity Agenda for Black Men” makes a range of promises aimed at shoring up the support of this traditionally core democratic base. It includes “one million loans that are fully forgivable to Black entrepreneurs and others to start a business,” “education, training and mentorship programs that help Black men get good-paying jobs,” and “legalizing recreational marijuana and creating opportunities for Black Americans to succeed in this new industry.”

Crucially for the digital asset space, the agenda also noted the statistic that “more than 20% of Black Americans own or have owned cryptocurrency assets.” For this reason, it promised that Harris would “make sure owners of and investors in digital assets benefit from a regulatory framework so that Black men and others who participate in this market are protected.”

Unfortunately, the agenda did not go into further detail about how it would make sure investors benefited from a regulatory framework, or even what she meant by “benefit.” Readers were left to make up their own minds about whether it meant a stricter, customer protection-focused regulatory framework, in line with the SEC’s current ‘if in doubt shut it down’ approach, or a more innovation friendly, ‘profits over consumer safety‘ approach.

Another line may indicate which side of this fence the comments lay, as the agenda also noted that “Vice President Harris appreciates the ways in which new technologies can broaden access to banking and financial services.”

This was certainly read by some as Harris showing explicit support for the digital asset space just a few weeks before the election. However, given the rather vague nature of the comments, this could be somewhat wishful thinking.

Other interested parties, taking the totality of Harris’ various comments into account, have offered a more measured interpretation. 

Alex Thorn, head of research at digital asset and blockchain platform Galaxy, argued that Harris has made promises to improve the regulatory environment for U.S. digital asset firms, but that she holds unfavorable positions on other related issues, including taxes and block reward mining. 

“While Trump is undoubtedly more favorable for the industry, we’re optimistic that Harris could be more supportive than Biden has been,” said Thorn in an October 14 post on X.

On taxes, Harris has emphasized on “rolling back Trumps tax cuts for the wealthiest Americans.” Thorn suggested that digital assets have been seen as an easy target for Biden and Democrats to raise revenue, and that there’s no evidence Harris feels different; meanwhile, on mining, Thorn argued that Harris’ climate justice platform could result in punitive measures against large consumers of electricity, such as digital asset miners. 

This latter leap of deduction exemplifies the legwork observers and policy predictors are being required to go, thanks to Harris’ reticence to speak at length on digital assets.

Outside of her few tantalizing comments referencing the sector, the only other indicator of how a Harris administration might approach digital assets comes from the prevailing wind in the broader Democratic party.

Democrats divided

When considering how Harris might govern, one has to take into account the general leanings of the two parties when it comes to the digital asset industry, as this will likely dictate a great deal of the legislative efforts post-election.

In general, with the exception of a few notable individuals like Rep. Nickel, the Democratic party has tended to favor consumer protection and regulatory oversight across industries, including the burgeoning digital asset space. This is in contrast to the more Republican-libertarian tendency towards free-market capitalism, innovation and personal responsibility, encouraging investors to make informed decisions in a less stringently regulated environment.

These are obviously broad brushstrokes, but as a rule legislative debates do often support this picture, and increasing polarization in politics has only made such tribal lines more pronounced and harder to cross.

This was on full display in some extremely partisan oversight hearings on the SEC’s approach to the digital asset space, and in particular its controversial chair Gary Gensler.

The most recent of these took place on September 24 in front of the House Financial Services Committee, and saw all five SEC commissioners, including Gensler, face a fierce grilling, primarily from Republican Representatives.

“Chair Gensler’s legacy will be defined by turning the once proud institution of the SEC into a rogue agency,” said Committee Chair Patrick McHenry (R-NC), who went on to accuse the SEC of enforcing regulations “often without adequate justification, economic analysis, or public engagement.”

Meanwhile, Rep. Tom Emmer (R-MN) accused Gensler of being the most “destructive” and “lawless” chair in the regulator’s 90-year history.

To differing degrees of vitriol, this, by and large, typifies the Republican take on the SEC’s supposed ‘regulation-by-enforcement’ approach to the digital asset space, which has seen the agency sue Binance, Ripple Labs, Coinbase (NASDAQ: COIN) and Terraform Labs—amongst others—in recent years.

Democrats, on the other hand, have tended to offer more support to the regulator. House Financial Services Committee ranking member, Rep. Maxine Waters (D-CA), last year praised Gensler for “doing exactly the job the American people want.”

“The SEC is very much implementing the priorities that I and my Democratic colleagues championed when we were in charge, and is shaping up to be the most pro-worker, pro-investor, pro-small business SEC since FDR created the agency,” said Waters.

This is a stance echoed by fellow Democrat Elizabeth Warren (D-MA), who sits in the Senate and has been a vocal critic of the ‘crypto Wild West’.

But things are not so black and white. In addition to the outspoken Nickel, Senate Majority Leader Chuck Schumer (D-NY) has indicated his support for getting digital asset legislation over the line this year, saying at an August fundraising event dubbed “Crypto4Harris” that “we all support Vice President Kamala Harris to be our next president, and we all believe in the future of crypto.” Sens. Debbie Stabenow (D-MI) and Kristen Gillibrand (D-NY) were also in attendance.

This split of opinion in the Democratic party may help explain why Harris has been so guarded with her own opinion and policy plans, in relation to the digital asset industry. 

By vowing to “encourage” technologies like digital assets and supporting those who invest in them, while at the same time emphasizing consumer protection, she could be seen as attempting to have her cake and eat it, walking a tightrope between appeasing those colleagues who favor strict regulations and controls, and those that back the industry. In doing so, she appears to be pitching either a “pragmatic” vision of the economy or a vision that’s purposefully blurry, one that offers the maximum room for maneuver and backpaddling, should she be elected in November.

All of this is to say it’s worth taking the vice president’s sparce comments with a pinch of salt. Unlike her relentlessly outspoken and unfiltered opponent, Harris’ reticence to speak too clearly or in-depth on the digital asset and blockchain industry leaves predictors with the thankless task of trying to interpret a four-course meal from chicken feed.

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