Why the crypto world wants Trump to win

While Trump's views on cryptocurrencies are crystal clear, Harris's stance is less clear.

The cryptocurrency industry is "full of fraud, charlatans and scammers," the head of one of the United States' top financial regulators told the BBC.

Investors around the world have lost too much money because crypto companies did not follow the laws their agency was trying to enforce," said Gary Gensler, chairman of the Securities and Exchange Commission (SEC).

The comments come against the backdrop of the industry spending millions of dollars on political donations in an attempt to influence the outcome of the November US election in the hope of obtaining more favorable laws.

In addition to the presidential race between Donald Trump and Kamala Harris, 435 House of Representatives districts are also up for re-election, as are 33 of the 100 Senate seats.

The future of cryptocurrency is one of the most hotly debated technologies in the world, an issue that appears to have stark divisions between Donald Trump and the outgoing Biden administration.

Trump has pledged to make the United States the "cryptocurrency capital of the world" and create a "national strategic bitcoin reserve" similar to the U.S. government's gold reserves in a bid to win votes from crypto enthusiasts.

Last week, he launched a new crypto company called World Liberty Financial and, while he offered few details, said "I think cryptocurrency is one of the things we have to do."

It's a sharp reversal from three years ago when he dismissed bitcoin as "looking like a scam" and a threat to the dollar.

Trump's new enthusiasm stands in stark contrast to the Biden administration, of which Harris is vice president.

The White House has launched an all-out crackdown on crypto companies in recent years.

In March, FTX founder and CEO Sam Bankman-Fried was sentenced to 25 years in prison for fraud, stealing billions of dollars from customers around the world, many of whom are still trying to get their money back.

Then in April, Changpeng Zhao, the founder of Binance, the world's largest crypto exchange, was sentenced to four months in prison and the company paid a $4.3 billion (£3.2 billion) fine. He admitted allowing criminals, child abusers and terrorists to register on his platform to launder money, in a case brought by the US Department of Justice.

The US Securities and Exchange Commission (SEC) has also filed a case against Binance. Last year, financial regulators brought a record 46 enforcement actions against companies trying to profit from the emerging technology.

The jailing of cryptocurrency boss Sam Bankman-Fried reflects the worst of the crypto industry.

"This is an area that has developed, and just because they record their crypto assets on new accounting books, they [falsely] say 'we don't think we want to follow time-tested laws,'" Gensler said.

He explained that rules forcing companies that want to raise funds from the public to "share certain information with them" have been in place since the SEC was founded, and these rules are intended to protect investors.

This dates back to 1934, after the infamous Wall Street crash of 1929, which marked the beginning of the Great Depression.

"Cryptocurrencies represent only a small portion of U.S. and global capital markets, but they could undermine trust in capital markets for average investors," Gensler said.

While supporters argue that cryptocurrencies offer a fast, cheap and secure way to transfer funds, a survey by the Federal Reserve, the U.S. central bank, found that the number of Americans using cryptocurrencies fell to 7% last year from 12% in 2021.

Harris hasn't said much about cryptocurrencies, but one of her advisers said last month that she would "support policies that ensure emerging technologies and the industry can continue to develop."

Recent meetings between her team and industry executives are aimed at building trust while giving crypto bosses hope for a brighter future for whoever wins in November.

“I can’t stress enough how important this is, not just for the United States but for the entire world,” said Paul Grewal, chief legal officer at cryptocurrency company Coinbase, who attended the meetings.

“The United States is not only a great market for crypto, but important technologies around crypto are being developed here. I think we have to realize that the rest of the world is not sitting there waiting for the United States to get its affairs in order.”

With the race for the White House so tight, “every vote is going to count, and the crypto vote is no exception,” he added.

Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), has been highly critical of some cryptocurrency companies.

The U.S. crackdown on cryptocurrencies this year has also been echoed in Europe. In April, the European Union agreed on new laws aimed at reducing the risk of cryptocurrencies being exploited by criminals.

Other regulators, however, have been slower to act. The Group of Twenty (G20) is developing minimum standards for cryptocurrencies, but these are not legally binding and implementation has been slow.

In the United States, a bill to regulate cryptocurrencies has been passed by the House of Representatives but has not yet been passed by the Senate. Critics argue it would reduce consumer protections. Coinbase’s Grewal supports the bill, saying: “This industry is not shying away from regulation.” He added that the industry simply wants the same standards applied to cryptocurrencies as other assets, “no stricter, but no looser.” With the November U.S. elections approaching, the cryptocurrency industry senses an opportunity to elect lawmakers sympathetic to the industry. By last month, the industry had spent a record $119 million on donations, according to research by the nonprofit Public Citizen. The money was used to “help elect candidates who support crypto and attack critics of crypto, regardless of political affiliation,” said Rick Claypool, research director at the consumer advocacy group.

He added that they spend more on corporate donations than any other industry as they try to get the U.S. Congress to yield to their demands for less regulation and weakening consumer protections.