Coinbase expects US to be crypto-friendly irrespective of election outcome

By Niket Nishant and Manya Saini

(Reuters) – The next U.S. administration will be “constructive” on cryptocurrencies regardless of which party wins, Coinbase CEO Brian Armstrong said late on Thursday, noting the sector’s growing political clout ahead of the November election.

The highly volatile cryptocurrency sector is considered a risky marginal sector and is under intense scrutiny by the U.S. Securities and Exchange Commission, which accuses the cryptocurrency sector of violating securities laws.

But backing from Wall Street institutions and corporate giants such as Elon Musk, and approval of U.S. exchange-traded crypto funds, has boosted its mainstream appeal, with both the Republican and Democratic parties acknowledging the sector’s growing clout in recent weeks.

“(Crypto) advocates are making their voices heard as a significant voting bloc. Politicians on both sides of the aisle have taken notice, and there is growing momentum to pass comprehensive crypto legislation,” Armstrong told analysts.

The largest U.S. cryptocurrency exchange is battling the SEC in court after the regulator sued Coinbase last year for allegedly failing to register as an exchange.

Meanwhile, three major pro-crypto super political action committees that didn’t even exist until this election cycle — Fairshake, Defend American Jobs, and Protect Progress — have raised more than $230 million to support friendly candidates.

The campaign is moving the needle for both parties. Republican presidential candidate Donald Trump vowed last week to create a bitcoin “stockpile.” Advisers to Democratic Vice President Kamala Harris have also reached out to top crypto companies to “reset” relationships, the Financial Times reported.

“Donald Trump is very pro-crypto and that theoretically creates a tailwind for the sector if he wins,” Dan Coatsworth, investment analyst at AJ Bell, told Reuters.

“We don’t know Kamala Harris’ stance yet, but there are reports that she may take a softer stance than Joe Biden.”

This would be a huge win for the industry, which has been warned for years by the SEC that it would push crypto entrepreneurs abroad.

A regulatory change “has the potential to bring a new wave of institutional capital into the space that would otherwise be sidelined,” said Mike Colonnese, an analyst at brokerage firm HC Wainwright & Co.

‘CHEVRON RESPECT’

Coinbase CEO Armstrong praised the Supreme Court’s recent decision overturning the so-called “Chevron deference” doctrine, which requires judges to defer to federal agencies’ interpretation of laws deemed ambiguous.

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The decision, seen as a blow to the powers of federal institutions, stated that interpreting the laws is the duty of the courts, not the institutions.

“We view this case as a sign that the Supreme Court is becoming skeptical of agency overreach, and we view it as a generally positive development for our industry,” said Armstrong, a vocal SEC critic.

Coinbase has added former U.S. Attorney Paul Clement, one of the lead attorneys on the case that led to the Chevron decision last month, to its board of directors.

“Changes in the U.S. election landscape and the Supreme Court’s decision to overturn a long-standing Chevron precedent have changed our view of Coinbase’s regulatory risks,” Citigroup analysts wrote in a note last month.

(Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Michelle Price and Arun Koyyur)