So, how might the Biden administration handle cryptocurrency? The answer depends on which member of the administration you examine. (President Joe Biden and Vice President Kamala Harris themselves have said next to nothing about crypto.)
Biden’s choice of Gary Gensler for SEC chairman was hailed by crypto flag-wavers as great news for the space. Gensler, former chairman of the CFTC (Commodity Futures Trading Commission), taught a 12-week course on cryptocurrency at MIT Sloan in Fall 2018 (“Blockchain and Money”), and has testified before Congress about cryptocurrency multiple times.
In a 2018 hearing in front of the House Agriculture Committee, former Minnesota Rep. Collin Peterson said that cryptocurrency “seems like a Ponzi scheme” and asked, “What’s behind this?” Gensler responded, “There’s really nothing behind gold either… Bitcoin is a modern form of digital gold.”
In a 2019 op-ed for CoinDesk, Gensler also doubled down on the future potential of blockchain technology: “The potential this technology to be a catalyst for change is real… This last point – crypto and blockchain technology acting as a catalyst for change – may not fulfill the heightened expectations of maximalists, but may be [Satoshi] Nakamoto’s most enduring early contribution.”
In the 2019 CoinDesk op-ed, Gensler also said that crypto exchanges have not yet been “appropriately brought within public policy frameworks,” a sign that he wants to see more regulation of exchanges. As SEC chair, Gensler will find himself in a position to bless or delay the imminent IPO of crypto exchange Coinbase.
More regulation is already in the works, from other agencies than the SEC.
Last month, FinCEN (the Financial Crimes Enforcement Network) proposed new customer information-gathering rules for crypto wallet providers. Companies like Square, Coinbase, and Kraken all voiced their displeasure. The discussion around increased regulation has highlighted a philosophical divide between Wall Street investors who welcome and cheer more regulation and early libertarian-type bitcoiners who initially gravitated toward the space because the lack of government interference appealed to them.
The former Fed chair, now Biden’s pick for Treasury Secretary, has said in the past that she is “not a fan” of crypto (JPMorgan CEO Jamie Dimon used very similar phrasing in November) because of its use in financing illegal activity. She also said it’s “not a stable store of value and it doesn’t constitute legal tender.”
In her confirmation hearing on Jan. 19, Yellen again said cryptocurrencies “are of particular concern… many are used for illicit financing.”
None of that sounds like good news for bitcoiners, but Yellen said in 2014 that the Fed “doesn’t have authority to supervise or regulate bitcoin in any way,” and that financial regulators should not “stifle innovation” when it comes to crypto. She is not likely to think the Treasury has jurisdiction over crypto, either.