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How do the election outcomes in India and the U.S. affect global crypto policies, with India’s crypto adoption growing and the U.S. maintaining its dominance?
Changing Stance of Political Leaders in the U.S. About Crypto
The ongoing elections in India and the upcoming elections in the U.S. could have profound implications for the crypto market, given the distinct roles both countries play in the world economy. India, with its massive population of over 1.4 billion people, has become a significant crypto hub. As of 2023, India boasts 93.5 million crypto owners, representing 6.55% of its population.
Meanwhile, the U.S., home to nearly 340 million people, has the largest crypto market by ownership percentage, with 15.56% of its population—around 52.9 million individuals—holding digital assets. In the U.S., more than 15% of American crypto owners hold over $10,000 in crypto assets. This group’s political influence is growing, with 1 in 5 Americans now owning digital assets.
This demographic is diverse: 22% identify as Democrats, 18% as Republicans, and 22% as Independents. Additionally, 60% are Gen Z or Millennials, and 41% are minorities. This diverse crypto voter bloc could play a key role in the 2024 elections, especially in swing states where narrow margins often decide elections.
In contrast, India’s general election in 2024 is not expected to bring immediate changes to crypto policy. Prime Minister Narendra Modi, who is seeking a third term, is likely to continue the current restrictive stance on crypto, including the 1% tax deducted at source on transactions. Despite the country’s rapid adoption of digital assets, crypto remains a niche issue for the majority of Indian voters, overshadowed by more pressing economic and social concerns.
Political Shifts in the U.S.
The political environment in the U.S. is experiencing a turbulent shift regarding crypto. Both former President Donald Trump and current President Joe Biden have altered their stances in ways that could dramatically influence the crypto market.
Donald Trump’s presidential campaign recently announced it would begin accepting donations in crypto, marking a stark change from his previous skepticism toward digital assets. The campaign’s fundraising page now allows any federally permissible donor to contribute using various crypto assets, including Bitcoin (BTC), Ethereum (ETH), and US Dollar Coin (USDC), as well as low-value coins like Shiba Inu (SHIB) and Dogecoin (DOGE).
“Trump’s embrace of cryptocurrency isn’t entirely new. He has already received millions in cryptocurrency through his Trump Digital Trading Cards non-fungible token (NFT) projects.”
On the other hand, the Biden administration appears to be preparing for a strategic pivot on crypto regulations, potentially aligning closer with the digital asset community ahead of the November election. This speculation follows the recent approval of a spot Ether ETF, a significant change in stance by the Securities and Exchange Commission (SEC).
“The sudden positive sentiment around spot ETH ETFs likely reflects acceptance of crypto within financial markets and regulatory bodies.”
However, this shift is not without its complexities. The approval of spot ETH ETFs suggests a maturation of the crypto market, but it also raises concerns about political motives aiming to exert greater control over a decentralized market through regulatory means. The U.S. is definitely at an advantage in terms of strong support from political parties despite hurdles from the SEC. Crypto strategy is a strong part of the agenda of political parties in the U.S., unlike India where crypto policies aren’t as big a concern among voters.
India’s Influence 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 steep tax on crypto transactions (1% deducted at source for each transaction) is unlikely to significantly influence the upcoming election. Instead, pressing issues like unemployment, religious tensions, minority rights, electoral bonds, institutional independence, and agrarian policies dominate the political discourse.
Meanwhile, neither the major parties, Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) nor the Indian National Congress (INC), has mentioned cryptocurrency, blockchain, or Web3 in their manifestos. However, this doesn’t necessarily mean they lack plans for the ecosystem. Political parties in India often use indirect language to address crypto-related topics.
During Modi’s second term, his administration introduced several crypto-related policies, including a 30% tax on profits from digital asset sales, no offsetting of losses, and a 1% tax deducted at source for every transaction. Incentivizing aspiring developers, institutional investors, VCs, and builders of Web3 to come up with real-world solutions for domestic market challenges and lowering the taxation rate of digital asset ownership are some steps that can ensure India is at the forefront of the blockchain revolution.
Regardless of the election outcome, India’s Web3 policies are expected to remain largely unchanged in the near future. If Modi wins, his current policies will likely continue, and any updates to crypto policy won’t be an immediate priority. The opposition, if it wins, will have other urgent issues to address first.
How U.S. Election Results Could Influence Crypto Regulations
The upcoming U.S. elections could significantly impact cryptocurrency regulations, depending on whether Donald Trump or Joe Biden wins. Each administration has a different approach that could shape the future of the crypto market. A Trump administration might pursue a more crypto-friendly regulatory environment, promoting 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 attract young, tech-savvy voters who are active in the crypto space.
In contrast, the Biden administration’s cautious approach seems to have reversed. The SEC’s approval of a spot Ether ETF indicates a possible softening of the administration’s stance on crypto. Despite this, Biden’s administration will likely emphasize consumer protection and financial stability, leading to more stringent regulations.
“The U.S. will likely maintain its influence on international crypto regulations regardless of the election outcome.”
The U.S. House of Representatives’ “Financial Innovation and Technology for the 21st Century Act” reflects bipartisan support for technological innovation in the digital assets space. This bill aims to foster advancements in the crypto sector. Indian leaders need to adopt a similar approach towards regulatory clarity irrespective of which administration comes to power. The country needs to ensure a robust domestic Web3 ecosystem with a special focus on empowering the youth to explore the technology and build careers in the same field to concentrate efforts in the country’s Web3 development agenda.
Whether it’s Trump or Biden, the ripple effects will be felt worldwide. And with India watching closely, their response could set the stage for a new era in global crypto regulation.
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