Which presidential candidate will be best for fintech over the next four years?
Of all the issues troubling the 2024 presidential campaign, it’s safe to say that the future of fintech is not among the top two or three. Nonetheless, it is also safe to say that the fintech sector under a Trump administration will face different challenges and opportunities than under a Harris administration.
First, let’s look at how Republican candidate Donald Trump’s policies could have a broader impact on fintech and financial services.
“The President of Crypto”
Whether or not “they” call Donald Trump “the president of crypto,” the man who once called Bitcoin a “scam” has since had a change of heart when it comes to cryptocurrencies.
The now-famous quote – “You know, they call me the crypto president…” – comes from an ad by the former president. ran in August marketing its fourth series of non-fungible token (NFT) digital trading cards. Earlier this year, Trump suggested creating a “strategic national stockpile of Bitcoin” in an effort to ensure America is the “crypto capital of the planet.”
Although not clearly stated on the Trump campaign website, the Republican Party’s platform regarding digital assets includes a reference to the opposing party’s “illegal and un-American crackdown on crypto,” on the one hand , and his opposition to “the creation of a central bank digital currency”. on the other. The party, whose positions are likely identical to those of the former commander-in-chief, is also committed to defending the right of American citizens to mine Bitcoin and provide custody of their digital assets themselves.
Republican deregulation
The idea of a Republican president favoring deregulation in general has been ingrained in voters’ perceptions of the party since at least the 1980s. And as Jamie Dimon, chairman and CEO of JPMorgan Chase, attacks regulators (“If you’re in a knife fight, you better bring a knife,” he recently told attendees at the American Bankers Association convention), the question is whether the administration Trump will likely provide Mr. Dimon with the silverware he is looking for.
Looking again at the RNC agenda, the most specific reference to deregulation is the pledge to “reinstate President Trump’s deregulatory policies” as part of the former president’s plan to “reduce costly and burdensome regulations. If past is only prologue, then Trump’s signing of the Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018 might provide some clues. Here we find initiatives aimed at expanding access to mortgage credit, encouraging capital formation and providing additional protections for student borrowers.
Do tax cuts + tariffs = inflation?
Besides the tax cuts, the most notable element of Trump’s economic plan is his adoption of tariffs on products made outside the United States. In fact, the former president went so far as to suggest that the income tax be abolished in favor of its new pricing approach to financing government operations.
And while it’s extremely unlikely, the combination of Trump’s tax cut proposals and his enthusiastic attitude toward tariffs could ironically pave the way for an economy more vulnerable to inflation. This could ultimately lead to higher interest rates and a tightening of monetary policy compared to the state of the US economy at the end of 2024.
You don’t have to be a longtime fintech veteran to remember the devastating impact that higher borrowing costs can have on the startup community — or its financiers. And it’s hard not to worry that a resumption of these conditions could leave startups and their backers in an even more constrained and risk-averse position. than they were this year.
Now let’s take a look at Democratic candidate Kamala Harris’ policies and how they could impact the fintech industry.
From big banks to unwanted fees
A story from today Washington Post highlights Vice President Kamala Harris’ tenure as California Attorney General and her role in shoring up a “multi-billion dollar mortgage settlement” with big banks in the wake of the Great Financial Crisis. Not only is it an important part of Harris’ resume, but it’s also a story she’s enthusiastically telling on the campaign trail.
It’s worth noting that, for all his combative rhetoric, most observers expect the vice president to be more pro-business than the notoriously pro-labor current president. Still, it’s easy to imagine a Democratic administration seeking to strengthen or even expand a range of consumer protections in financial services.
That said, the campaign focuses less on bashing big banks and more on solving the small inconveniences of consumers’ daily lives. Under the banner “Reduce Costs by Protecting Consumers from Fees and Fraud,” for example, the Harris campaign pledges to ban unnecessary fees across the board and make it easier to cancel unwanted subscriptions.
Opportunity economies
The Harris campaign touted her concept of an “opportunity economy,” in which the federal government plays an active role in helping individuals, families, small businesses and communities maximize their ability to thrive in a capitalist economy. This includes the launch of a Small Business Development Fund that leverages low- or no-interest loans to help entrepreneurs grow their businesses and create jobs. This “opportunity economy” also requires the federal government to commit to allocating one-third of its contracts to small businesses, reducing excessive work permit requirements, and helping small businesses reduce costs. bureaucratic formalities and to declare their taxes more easily.
The vice president’s plan specifically targets startups, setting a goal of 25 million new business applications over the next four years and a tenfold increase in the startup expense deduction, from $5,000 to $50,000. Additionally, Harris’ campaign calls for an “America Forward” tax credit designed to encourage investment and job creation in “key strategic industries,” as well as to “develop and make permanent” the resource national research on artificial intelligence. The latter is a shared research infrastructure that gives startups and researchers access to computing power, data and analysis tools to support AI innovation.
Housing and the “sandwich generation”
Two areas of the vice president’s agenda — the pledge to build more housing and the goal of making day care and elder care easier and more affordable for caregivers — could have interesting impacts on services financial and fintech. The first, which includes a plan to build three million more homes and provide $25,000 in down payment assistance, could cause a shock to the financial services industry that would affect bankers, lenders and lenders alike. mortgage loan specialists. The campaign also advocates for tax credits to encourage home builders to build affordable housing, as well as a Neighborhood Housing Tax Credit, which supports “investments in housing that would otherwise be too costly or difficult to develop or rehabilitate.
This latest proposal — aimed at easing the financial burden on Americans caring for both young children and elderly parents — does not appear prominently on the Harris campaign website. But those who have heard the vice president speak in recent weeks know the challenge, which she describes as the plight of the “sandwich generation.” The Harris campaign has suggested a number of solutions, from expanding Medicare to raising wages for home care workers. What’s interesting from a fintech perspective is the idea that resources devoted to elderly care in particular could draw attention to the work of fintech innovators around the world. Goldenhas Eternal securityhas Berev specialized in providing financial services to older people and those who care for them.
Many of Harris’ campaign plans will require approval from a Congress that could easily remain divided between the two parties. While this could limit the sheer scope of successful initiatives, it would create the kind of equilibrium (or, if you prefer, impasse) that often accompanies strong economies. And that, in itself, would be a good thing, but not a bad thing for fintech and financial services.