Given how far the crypto sector has progressed over the years, it is amazing to think of how little institutional support it had just a decade ago. Industry veterans will recall a time when tax agencies didn’t both with digital assets, big corporations wouldn’t touch them at all, and the government didn’t quite know what to make of it.
Now, crypto tax regulation is more robust than it has ever been, major corporations accept crypto (with some launching their own in-house tokens), and the government of Florida is proudly investing in these assets.
Florida Takes a Dip Into Crypto
While big corporations and the government are giving crypto more attention these days, it is worth noting that the industry has always had a passionate support base. From the early miners of tokens like Bitcoin to the response that new tokens are getting, this is quite evident. It is not unusual for a crypto presale to raise millions of dollars in a matter of weeks and to see a strong debut in the market. As Alan Draper writes new crypto launches are a hot commodity these days thanks to the returns they can offer. And the outside world has certainly taken notice.
As crypto continues to rise, one trend we’re seeing is investments in various tokens from the public sector. Once considered too risky for anyone to invest in, pension funds all over the world are beginning to stock up on them. This is partially because of the improvement in crypto regulations and options like the spot ETFs launched earlier this year.
According to a recent statement from Florida’s Chief Financial Officer Jimmy Patronis, the state has a considerable amount of money riding on the performance of the crypto market. Specifically, the state has $800 million of its pension fund already invested in cryptocurrency. This puts it in the same category as states like Michigan and Wisconsin which also have investments in crypto for their pension schemes. Not only is this an established practice in the public sector but Patronis expects this figure to only increase in light of Donald Trump being elected as president.
“Crypto’s not going anywhere. We’d be a fool if we’re not prepared to do everything we can to harness the opportunities there,” he said in a recent interview.
In the lead-up to the elections, Donald Trump positioned himself as the best candidate for the crypto sector. He famously became the first US presidential candidate to accept crypto for campaign donations and also secured endorsements from top figures in the industry.
While his claims have caused some division within the industry, many believe that his victory will ultimately benefit them. After all, Trump has released his own line of NFTs and crypto-themed sneakers. This should mean that his administration will be accepting crypto, especially for use within the public sector.
Where Trump and Patronis also align in opinion is on the issue of a Central Bank Digital Currency (CBDC). Trump said during a rally earlier this year that, if elected, he would scrap plans for a digital dollar, which would have been the US’s version of a CBDC. Industry stakeholders have been calling for a digital dollar for years, partially to keep up with global innovation. Countries like China and the British Virgin Islands already have CBDCs and the digital euro is currently in development. The way some see it, the US not having a CBDC puts it at a disadvantage compared to other countries.
Others feel differently and believe that CBDCs have nothing to offer the public and go against the principles of crypto as a whole. Patronis appears to be of this opinion. In a recent interview, he said that such a crypto could serve as a hedge against government monetary policy.
Late last month, he penned an open letter to the Florida State Board of Administration’s executive director, Chris Spencer. Not only did the letter call for a “Digital Currency Investment Pilot Program” and an investigation into the feasibility of adding digital currencies to the fund but also backed Governor DeSantis’ plans to stop CBDCs from being developed. The issue of CBDCs will continue to be a complicated one moving forward.
What Does a Trump-Backed Crypto Industry Look Like?
Now that we are facing a Trump presidency, it is worth exploring what changes the crypto sector can expect. First, the incoming president has made it clear that he plans to make changes to the Securities and Exchange Commission’s leadership, specifically firing current chair Gary Gensler. While a successor has not been chosen, many believe it will be a pro-crypto candidate that will push for better treatment of companies and investors in the space.
Another possible effect could be that better federal laws are being passed across the country. Several states like Ohio are looking into regulations that would allow for crypto to be used for things like taxes and a pro-crypto president could help in moving these along.
Then there will be the direct impact on the tokens being released and the performance of existing tokens. Bitcoin, for example, reached a new all-time price high in the wake of Trump’s victory and tokens like TRUMP coin have seen a major boost. If Trump’s second time in office is anything like his first, we can expect an influx of high-performing meme coins.
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