2024 US Election & the Future of Crypto

Attempts by legacy U.S. financial institutions to penetrate the crypto landscape are expanding dynamically. Following the regulatory nods for spot Bitcoin and Ethereum ETFs, crypto assets have secured a formal path into client portfolios, and empirical data confirms that a growing cohort of traditional equity investors are actively diversifying into crypto assets. According to an analysis by JP Morgan, annual income correlates positively with the likelihood of holding traditional brokerage accounts, and crypto trading account ownership is similarly concentrated within high-income cohorts. For respondents with an annual income of $100,000 or higher, equity account penetration stands at approximately 60%, whereas crypto exchange account ownership is estimated at around 30%, indicating a lingering divergence between the two asset classes. Meanwhile, demographic variances emerged across income and account distributions between equities and crypto assets; notably, crypto account ownership exhibited the lowest penetration rate among the Caucasian demographic. Conversely, this implies that the Caucasian population—which constitutes the largest demographic pillar in the United States at 62%—retains substantial latent capital capacity for net-new inflows into crypto assets. As institutional marketing campaigns by asset management titans such as Fidelity and BlackRock accelerate in the wake of the spot ETF approvals, crypto asset allocations within the Caucasian demographic, which accounts for over 60% of the aggregate U.S. population, are highly projected to expand. (As of 2020, the U.S. demographic breakdown stood at Caucasian 62%, Hispanic 19%, African American 12%, and Asian American 6%.) Taxation metadata reported to the U.S. Internal Revenue Service (IRS) in 2020 reveals that states traditionally aligned with the Democratic Party—such as Washington, California, Colorado, and New York—exhibited a denser concentration of crypto asset investors. Forbes journalist William Baldwin parsed 9.3 million filings that reported a gross income exceeding $200,000 out of a universe of 20 million IRS data points from 2020, structurally ranking and analyzing the states by their respective crypto asset penetration density. Because these metrics reflect historical declarations bound to the 2020 tax year, the absolute crypto asset holding ratio appears compressed within the 2% to 3% range. Nevertheless, the structurally elevated crypto investment propensity within California, Washington, and New York is projected to remain intact today. The median age of these jurisdictions sits below the national average, and regions like California and Washington harbor a disproportionately high density of software engineers and IT professionals. Given that the jurisdictions demonstrating a higher propensity for crypto asset ownership are historically deep-blue Democratic strongholds, maintaining a dogmatic, adversarial regulatory posture presents a severe political liability for the Democratic Party. Characteristically, on September 22, Democratic candidate Harris articulated her inaugural formal stance on crypto assets at a New York fundraising gala, stating, “We will encourage innovative technologies like AI and digital assets while protecting consumers and investors.” Although granular policy frameworks remain undisclosed, the reality that crypto has cemented itself as a pivotal macroeconomic agenda item suggests that bipartisan efforts to forge legislative compromise will persist.