A united government could make it easier to agree on new crypto laws and "follow the spirit of Biden's executive order" to keep the U.S. at the forefront of innovation, Morgan Stanley (MS) said in a report Wednesday examining the impact of the midterm elections on the cryptocurrency sector.
According to the bank's public policy analysts, legislation affecting technology regulation, cryptocurrencies, prescription drug pricing, tax increases and competition with China will have varying chances of passing by the end of 2023, depending on the outcome of the November elections.
Establishing regulations for digital assets is important for the growth of the industry, particularly in relation to stablecoins, crypto products, institutional ownership of cryptocurrencies, and the possibility of a central bank digital currency (CBDC)," the report's authors said.
A "prolonged period of uncertainty" regarding new legislation - as government agencies such as the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and others battle over regulatory terrain - would negatively impact the crypto industry, they added.
Policymakers in both the Democratic and Republican camps have shown frustration with current crypto regulation, arguing that stricter government oversight is needed to address a number of concerns, particularly with regard to consumer protection, the note said.
The cryptocurrency industry is having a greater impact on political views on both sides, with the Morgan Stanley report noting a large increase in lobbying spending over the past year.