Konstantin Tserazov: The Future of U.S. Crypto Rules: A Key to AI Development and Global Progress

The U.S. presidential race leading up to the November elections showcases the various thoughts within the political circles on how crypto regulation will evolve in the country.

The untold rules of political competition mean that each candidate must promote a maximally distinguishable program to set themselves apart from other participants in the U.S. presidential race. For instance, Joe Biden’s administration has shown a tepid responsiveness to demands from the U.S. crypto sector for clearer and friendlier regulation, prompting many candidates to take a stronger stance on this issue.

Trump: Crypto Skeptic Turned Crypto Supporter

We have seen even previously skeptical Bitcoin and crypto critic Donald Trump, in his July 27 speech at the Bitcoin conference in Nashville, present himself as the world's staunchest crypto supporter. Moreover, in the fall of 2024, Trump was unafraid to go further in this direction by supporting the public DeFi project World Liberty Financial (WLFI) and its token in a message on X social media on September 30.

Trump's message brought to mind the late John McAfee, who passed away in June 2021. Like Trump, McAfee was a colorful presence at crypto events and often backed controversial projects. However, it was a well-kept secret among his close friends that his true passion was Bitcoin.

Trump's endorsement of the DeFi project receives a symbolic response in the project's statement: "Due to outdated policies and regulations in the U.S., one whitelist is limited to accredited U.S. investors while another is for all non-U.S. persons. We’re fighting for changes so all Americans can access World Liberty Financial and join the financial revolution." It is also significant that this statement was first noticed as having appeared on a British Virgin Islands-based Telegram channel rather than on U.S.-based social media.

Regarding Trump's movement, Make Crypto Great Again (MCGA), one company authorized to use Trump's name, has opened pre-orders for Trump-related watches, including a luxurious model priced at $100,000. Trump endorsed this initiative in a video, describing these gold watches encrusted with diamonds.

However, it became controversial when individuals attempting to pre-order Trump watches found that they could choose to pay in Bitcoin too. Many critics, particularly Democrats, criticized this move, suspecting lax Know-Your-Customer (KYC) norms were being implemented. Nevertheless, the pre-order process did gather personal information, indicating that KYC was indeed in place —albeit not as visibly strictly as one would see when applying for financial services at traditional institutions.

Elon Musk’s Inroads into Crypto

At the same time, it's worth recalling how Elon Musk’s Tesla navigated similar waters. Tesla had previously introduced Bitcoin payments for some products but quickly removed this option due to regulatory concerns in the U.S., which are not as crypto-friendly as they could be. Anyway, Tesla's case indicates that Elon Musk strives to keep pace with modern trends, a strategy also evident in SpaceX.

Elon Musk's innovative empire, Tesla and SpaceX, continues to make waves in the crypto sphere. As of early October 2024, Bitcoin holdings of these companies are valued at about $1.3 billion.

Meanwhile, SpaceX is gearing up for a new milestone: its first-ever polar orbit mission. A symbolic passenger on this groundbreaking flight will be a Bitcoin pioneer, the founder of a major Bitcoin mining pool. This strategic move suggests that SpaceX is not only pushing the boundaries of space travel but also aligning itself with emerging technologies. As the company draws closer to its anticipated IPO, such bold initiatives are likely to excite investors and bolster its market value.

Shifting Winds?

Under the Biden administration, Bitcoin mining has come under scrutiny as part of a broader energy policy shift. The White House, signaling its stance on cryptocurrency, has pushed miners toward generating their own solar and wind energy, effectively discouraging reliance on the public grid.

This reflects a broader regulatory crackdown on crypto in the U.S., where projects like the Telegram Open Network (TON) blockchain and Gram tokens — backed by Telegram and its founder, Pavel Durov — have faced significant hurdles, even under Trump’s presidency. In fact, a New York court shuttered the original TON initiative, though its revival under different conditions remains a subject of intrigue.

Even this time, Telegram didn’t claim direct responsibility for the revived TON blockchain and new tokens — Toncoins. Meanwhile, the founder of the messenger was detained in Paris on August 24, 2024, and then released on bail. The French authorities didn’t specifically mention the new crypto project, which started thriving on Telegram via the development of the digital wallet and the opportunity to buy, sell, and send crypto, but Paris’s objections to Telegram’s course of development implied they wanted more regulatory control over the messenger.

The very sensitive issue of Toncoins has not been raised publicly by French authorities yet, but the intention of not only Paris "to make clear how to deal with the freedom of communications at Telegram" can’t avoid the question of the allowable degree of freedom in crypto financial interactions via messenger.

The World Eyes U.S. Crypto Strategy Amidst Global CBDC Advances

As a tradition, Europe, but not only Europe, waits to see how the U.S. will sort out the crypto issue. The logic of political debate has led to Republicans opposing the issuance of digital dollars, a CBDC of the Fed. But this is a catch. The world is undergoing great changes now, and all can see how BRICS+ countries (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates) are eagerly discussing the possibility of launching a blockchain-based platform for multi-currency settlements.

Moreover, Russia is gearing up to promote its digital ruble, while China has been driving the adoption of its digital yuan over the last three years. Beijing has already used it as payment not only in mainland China but in Hong Kong as well. So, the U.S. risks being left behind as other top-20 countries start taking niches in the CBDC market.

The Intersection of U.S. Crypto Regulation, Green Energy, and the AI Boom

The crypto regulation issue in the U.S. is closely connected with energy development. Green energy, as a response to climate change, may seem highly effective if the demand for electricity doesn’t skyrocket. But that’s the case.

Bitcoin mining in the U.S. currently represents just 0.1% of total electricity usage, but its rapid growth is sparking concern. The bigger — and perhaps more surprising — story is the surging power consumption of U.S. data centers, driven by the rise of AI. Projections suggest that data centers could soon consume up to 10% of the nation's electricity supply, a staggering figure that underscores the looming energy challenge as tech giants race to scale their digital infrastructure. As these demands soar, the strain on the grid will be impossible to ignore.

The acute electricity situation is underscored by developments one can notice. Amazon is hiring a chief engineer for nuclear energy, while Microsoft is buying and reopening previously closed nuclear power plant to drive its AI projects. The CEO of Google also mentioned that it would be a good idea to build a reactor and a data center nearby.

Experts in several prominent banks, such as Bank of America, Barclays, BNP Paribas, Citi, Morgan Stanley, Goldman Sachs, Abu Dhabi Commercial Bank, Ares Management, Brookfield, Crédit Agricole CIB, Guggenheim Securities, Rothschild & Co, Segra Capital Management, and Société Générale, are expressing a positive attitude toward nuclear power development in the world and actually support the last COP28 declaration, which proclaims a goal to triple nuclear energy capacity by 2050.

It’s a fair game. The new digital infrastructure, fintech, and banking are increasingly reliant on the combination of two innovations, blockchain and AI, both of which are very electricity-consuming. Those corporations without their own nuclear reactors will soon struggle to power their AI, which is why we see extraordinarily intense negotiations between the U.S. on one side and oil-rich Gulf countries on the other.

How the U.S. Regulation Will Shape the Future of AI and Global Finance

However, the key to success in this matter lies in crypto regulation in the U.S. If the ongoing obscurity and tug-of-war between the White House and Congress continue, the U.S. will fall behind other countries. It is impossible to effectively leverage AI in the financial sector without applying the power of blockchain and utilizing this innovation in the form of cryptocurrencies, including NFTs and tokens. Without this, BlackRock's ambition for broader asset tokenization in the world will not come to fruition.

When the dust settles after the November presidential elections in the U.S., it will be a high season for all regulators in the U.S. to energetically chart a crypto and blockchain course for the country. A bipartisan approach is a critical necessity, regardless of who becomes the 47th President of the U.S. The lack of transparent legislation hurts the crypto industry. If, in 2021, it received about one out of every twenty dollars of venture investments in the world, then in 2024, the allocation to crypto projects in the global venture portfolio is expected to be just 2%.

And, of course, it’s time to bring AI and crypto energy issues onto the global agenda. G7 and BRICS+ are destined to find a way to collaborate on these issues. There is no other way to drive humankind into a new world of abundance due to the proliferation of a global ecosystem based on blockchain and AI.

We see how new ways to communicate financially are emerging; they challenge systems such as SWIFT and the role of the U.S. dollar as a key reserve currency. At the beginning of October 2024, DXY flirted with numbers near the critical level of 100 and has shown a decline of 5.5% over the last 12 months.

It would be a mistake to underestimate the potential of the Chinese yuan and the currencies of Gulf countries, AED in particular. This year, Iran struck a free trade agreement with The Eurasian Economic Union (EAEU), and the UAE is also going to do the same.

Crypto, as a financial embodiment of the blockchain principle, is also in play and helps reach unbanked people in the Middle East. Local fintech startups create ubiquitous financial applications that cross borders.

All these developments need adequate feedback from regulators in each country around the world, and the role of crypto regulation in the largest economy in the world and in the most deeply structured financial market is pivotal. The world will closely monitor what’s going to happen in this aspect during the next