will votes decide crypto’s fate?

As India’s crypto adoption grows and the US maintains its dominance, how are election results in India and the US affecting global crypto policies?

Considering the different roles that both countries play in the world economy, the ongoing elections in India and the upcoming elections in the US could have profound impacts on the crypto market.

India has emerged as the largest crypto hub with a huge population of over 1.4 billion. As of 2023, India has 93.5 million crypto holders, representing 6.55% of its population.

Meanwhile, the United States, home to approximately 340 million people, has the largest crypto market by ownership percentage, with 15.56% of its population (approximately 52.9 million people) owning digital assets.

In the US, more than 15% of American crypto holders have over $10,000 in crypto assets. This group’s political influence is growing, and 1 in 5 Americans now own digital assets.

This demographic is diverse: 22% identify as Democrats, 18% as Republicans, and 22% as Independents. Additionally, 60% are Generation Z or Generation Y, and 41% are minorities.

This diverse bloc of crypto voters could play a significant role in the 2024 elections, especially in swing states where elections are often decided by narrow margins.

In contrast, India’s general elections in 2024 are not expected to bring sudden changes in crypto policy.

Prime Minister Narendra Modi, who is seeking a third term, is expected to maintain his current restrictive stance on crypto, including a 1% tax on transactions levied at source.

Despite the country’s rapid adoption of digital assets, crypto remains an issue overshadowed by more pressing economic and social concerns for the majority of Indian voters.

Political leaders in the US are changing their stance on crypto

The political landscape in the US is experiencing turbulent change regarding crypto. Both former President Donald Trump and current President Joe Biden have changed their stances, which could significantly impact the crypto market.

To better understand these changes, crypto.news interviewed industry experts Mihał Popieszalski, CEO of MatterFi; Tim Delhaes, CEO of Grindery; and Nishal Shetty, CEO of WazirX.

Donald Trump’s presidential campaign recently announced that it would begin accepting donations in cryptocurrency; This marked a sharp shift from his previous skepticism towards digital assets.

I am not a fan of Bitcoin and other Cryptocurrencies, which are not money and are highly volatile in value and appear out of thin air. Unregulated CryptoAssets can facilitate illegal behavior including drug dealing and other illegal activities….

— Donald J. Trump (@realDonaldTrump) 12 July 2019

The campaign’s fundraising page now allows any federally permitted donor to hold a variety of crypto assets, including Bitcoin (BTC), Ethereum (ETH), and U.S. Dollar Coin (USDC), as well as low-income Shiba Inu (SHIB) and Shiba Inu (SHIB). It allows people to contribute using valuable coins. Dogecoin (DOGE).

This decision seems likely to appeal to a core group of young male voters who are increasingly likely to invest in digital assets.

Trump’s embrace of cryptocurrency is not entirely new. Trump has already received millions of cryptocurrencies through Digital Trading Cards and non-fungible token (NFT) projects.

Popieszalski gave the following information about the political consequences of this decision:

“The political climate of the United States has seen changes over time, especially with the rise of polarization and the rise of populism. Recently, crypto has emerged as a new frontier in the political era, influencing policy debates and campaign strategies.”

The Biden administration, on the other hand, appears to be preparing for a strategic pivot on crypto regulations, potentially aligning more closely with the digital asset community ahead of the November elections.

This speculation follows the recent approval of the spot Ether ETF, a major change in stance by the Securities and Exchange Commission (SEC).

It’s hard to believe that the SEC would do such a favor as approving a spot ETH ETF.

But politics is politics, and crypto has been winning the political battle for months.

Maybe the Biden side saw how many voters Trump could win over with a pro-crypto comment and decided.

— Jake Chervinsky (@jchervinsky) May 21, 2024

Dragonfly Managing Partner Haseeb Kureshi believes Biden is likely to soften on crypto to avoid losing votes in a tight race, stating: “He doesn’t want to lose votes in a tight race on what is ultimately a minor issue for him.”

We’ve been saying for weeks that Biden would soften up on crypto heading into the election. After all, he does not want to lose votes in this difficult race, which is a minor issue for him.

ETF is the first sign of this; I think we see other agencies softening over the next few months.

— Haseeb ＞|＜ (@hosseeb) May 21, 2024

Delhaes said:

“The presidential race is such that the candidates are trying to appeal to all kinds of niches, including crypto enthusiasts.”

Popieszalski also commented:

“The sudden positive sentiment around spot ETH ETFs likely reflects the cryptocurrency’s acceptance by financial markets and regulators. “The approval of such ETFs shows that regulators are responding to political and economic pressures.”

However, this change is not without its complexities. Delhaes noted:

“The approval of spot ETH ETFs shows that the crypto market is maturing… But it also raises concerns about political motivations aimed at gaining greater control over a decentralized market through regulatory tools.”

WazirX CEO Nishal Shetty added:

“The United States certainly has an advantage in terms of strong support from political parties, despite the SEC’s obstacles. “Unlike India, where crypto politics is not as big a concern among voters, crypto strategy is a strong part of the agenda of political parties in the US.”

India’s impact on the crypto world

Crypto’s importance as an election issue in India is minimal. For most voters, Web3 and related technologies remain complex and largely unknown.

Even India’s high tax on crypto transactions (a 1% deduction at source for each transaction) is unlikely to significantly impact the upcoming elections.

Instead, pressing issues such as unemployment, religious tensions, minority rights, electoral ties, corporate independence and agricultural policies dominate political discourse.

Meanwhile, neither major parties nor Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) or the Indian National Congress (INC) have mentioned cryptocurrency, blockchain or Web3 in their manifestos.

However, this does not necessarily mean that there are no plans for the ecosystem. Political parties in India often use indirect language when addressing crypto-related issues.

For example, the BJP’s manifesto talks about educating senior citizens about digital scams and taking action against threats to digital sovereignty. INC talks about digital ledgers for agricultural transactions and addressing cybersecurity issues that could threaten India’s digital financial infrastructure.

During Modi’s second term, his administration implemented several crypto-related policies, including a 30% tax on profits from digital asset sales, no offset of losses, and a 1% tax deduction at source for each transaction.

Touching on ways to mitigate India’s lackluster approach, Shetty said:

“Encouraging aspiring developers, institutional investors, venture capitalists and Web3 creators to find real-world solutions to domestic market challenges and reducing the taxation rate of digital asset ownership are some of the steps that can be taken to ensure India remains at the forefront in this space. The blockchain revolution that is currently sweeping the world.”

Meanwhile, regardless of the election outcome, India’s Web3 policies are expected to remain largely unchanged for the foreseeable future. If Modi wins, his current policies will likely continue and any updates to crypto policy will not be an immediate priority. If the opposition wins, there will be other pressing issues to address first.

Shetty further added:

“India’s crypto ownership is impressive but it still has a long way to go before it becomes a leader. This progress may not be as rapid as society expects, but over the past few years regulators have been open to two-way dialogues and discussions with industry stakeholders.

How could US election results affect crypto regulations?

The upcoming US elections could greatly impact cryptocurrency regulations depending on whether Donald Trump or Joe Biden wins. Each administration has a different approach that can shape the future of the crypto market.

According to Popieszalski:

“A Trump administration could pursue a more crypto-friendly regulatory environment by encouraging innovation and investment in the sector.”

Trump’s moves to accept crypto donations and his recent history with digital assets show his support for the industry. This approach could appeal to young, tech-savvy voters active in the crypto space.

In contrast, the Biden administration’s cautious approach appears to have been reversed. The SEC’s approval of the spot Ether ETF suggests the administration’s stance on crypto may be softening.

Despite this, the Biden administration will likely push for tighter regulations, with an emphasis on consumer protection and financial stability.

Popieszalski notes:

“A Biden administration could emphasize consumer protection and financial stability, potentially leading to tighter regulations.”

Delhaes echoed Popieszalski’s words and said:

The US will likely maintain influence over international crypto regulations regardless of the election outcome. If Biden wins, you can expect a continuation of current regulatory approaches. “If Trump wins, the focus may shift to other issues, which could affect the pace of international crypto regulation.”

Meanwhile, the US House of Representatives’ “21st Amendment”. “Financial Innovation and Technology Act for the 21st Century” reflects bipartisan support for technological innovation in the field of digital assets. This bill aims to encourage developments in the crypto sector.

Shetty cited the importance of regulatory clarity and a strong native Web3 ecosystem, stating:

“Indian leaders need to take a similar approach to regulatory clarity, regardless of which administration comes to power. “The country needs to ensure a strong local Web3 ecosystem with special focus on empowering youth to explore technology and build careers in the same to focus efforts on the country’s Web3 development agenda.”

Whether it’s Trump or Biden, the ripple effects will be felt around the world. And with India watching closely, their response could pave the way for a new era in global crypto regulation.