Harris Advisors Hint at Tough Crypto Regulations

Vice President Kamala Harris, who recently entered the presidential race, has kept her policy details mostly private. With the Democratic National Convention coming up, she has promised to share more about her economic plans soon. While Harris hasn’t specifically mentioned her stance on cryptocurrency, insights can be drawn from her campaign advisors’ backgrounds, many of whom have experience in blockchain and Web3 regulation.

A notable addition to Harris's team is Brian Nelson, an attorney who was recently the Undersecretary at the Treasury’s Office of Terrorism and Financial Intelligence. Nelson, who left his federal job last month, was instrumental in shaping policies on cryptocurrency, particularly concerning crypto mixing services, which obscure transaction origins. During his tenure, the Treasury’s Financial Crimes Enforcement Network (FinCEN) proposed a rule to classify these services as a “primary money laundering concern.”

This proposal sparked debate in the crypto community, but Nelson defended it strongly. Speaking at the Consensus conference in June, he acknowledged the legitimate uses of mixing services but pointed out their role in hiding illicit funds. Nelson made a distinction between privacy-enhancing services and those that simply obscure transactions, arguing that the latter pose significant risks. He emphasized the need for transparency and security in public blockchains, even while recognizing the desire for privacy.

The proposed rule on cryptocurrency mixers and reporting requirements is still under consideration. Nelson reassured that the agency is committed to further stakeholder engagement to refine the proposal. He also addressed concerns about cryptocurrencies being used to finance terrorism. In a February hearing, Nelson refuted claims that cryptocurrencies are a primary tool for terrorists, particularly in the case of Hamas. He argued that reports of Hamas raising millions in crypto were exaggerated, maintaining that terrorists still prefer traditional financial methods.

Harris’s campaign has also brought in other former Biden administration officials, such as Brian Deese and Bharat Ramamurti, who have experience in economic policy and financial regulation. Deese, former National Economic Council director, co-authored a White House blog post in January 2023 outlining strategies to mitigate risks associated with digital assets. While acknowledging the benefits of digital assets, the post criticized the industry for often ignoring financial regulations.

Ramamurti, previously an aide to Senator Elizabeth Warren, also played a role in the regulatory space. He was involved in the White House’s efforts to block stablecoin legislation in the summer of 2023. Although the bill advanced in the House Financial Services Committee, it eventually stalled and didn’t reach a full vote. Ramamurti's involvement suggests a cautious approach by the Harris campaign toward cryptocurrency, in line with broader concerns within the Democratic Party.

In conclusion, while Harris has yet to outline her stance on cryptocurrency, her advisors' backgrounds suggest a careful, regulatory-focused approach to the industry. Figures like Nelson, Deese, and Ramamurti indicate that her campaign will likely emphasize the importance of regulation and oversight in the digital assets space. As the Democratic National Convention nears, more details on Harris’s economic and regulatory policies are expected to be revealed, providing further clarity on her position regarding the future of cryptocurrency in the U.S.