The cryptocurrency industry is no stranger to volatility — both in price swings and regulatory uncertainty. But as the 2024 US presidential election looms, major players like CoinbaseCOIN

and Ripple are betting that a change in administration could bring a much-needed reprieve from the Securities and Exchange Commission’s aggressive enforcement actions.

A not-so-subtle shift: Citigroup recently upgraded Coinbase to a buy rating with a price target of $345, indicating a 40% upside, citing the potential for a friendlier regulatory environment under a Republican administration. Analyst Peter Christiansen pointed to the Supreme Court’s overturning of the Chevron doctrine — which had allowed federal regulators to interpret unclear laws — as a game-changer for the industry. He also noted that former President Donald Trump, who is expected to speak at the Bitcoin2024 conference starting today in Nashville, could be a powerful ally in the fight against what many in the field view as regulatory overreach.

• Coinbase shares have jumped nearly 50% this year, adding more than $21B in market capitalization.
• According to Bloomberg, Citi’s upgrade has pushed the consensus recommendation from analysts to the most positive level in about two years.

Crypto’s Capitol Hill Conquest

The industry’s lobbying efforts have been nothing short of impressive, shelling out more than $60M since 2021 to shape federal policy. This campaign culminated in the House passing the Financial Innovation and Technology for the 21st Century Act (FIT21) in May, shifting some oversight from the SEC to the CFTC — an agency many in the sector view as more crypto-friendly.

• Over the last two elections, the industry has contributed nearly $90M to campaigns and other groups, supporting key allies like Rep. Patrick McHenry, who chairs the House Financial Services Committee.
• Crypto-backed Super PACs (independent political action committees) have also flooded the airwaves with ads touting friendly candidates in both parties — often without even mentioning crypto.

Betting on a Trump bump: Bernstein analysts Gautam Chhugani and Mahika Sapra believe the market hasn’t fully priced in the potential for a positive shift in crypto regulations under a Trump presidency. They note that Bitcoin’s price has reacted positively to perceived improvements in odds for a Republican win — and see “significant headroom” for institutional investors to allocate more to cryptocurrencies and crypto stocks if the regulatory landscape improves.

Not everyone agrees that a hands-off approach is the right move. Critics like Sen. Elizabeth Warren warn that inviting crypto deeper into the economy without adequate safeguards could lead to a repeat of the 2008 financial crisis (WP). However, the industry seems willing to roll the dice on a Trump victory — and the potential for a new era of crypto-friendly regulation.