Changes in the Speaker of the U.S. House of Representatives May Have Adverse Effects on the Encryption Industry

On October 3rd, the U.S. House of Representatives experienced a historic change. Current Speaker Kevin McCarthy was ousted, marking the first time in U.S. history that an incumbent speaker was removed through a vote. Subsequently, pro-encryption Republican Patrick McHenry temporarily assumed the role of Speaker.

This sudden event has raised many questions, including who will become the next official Speaker and whether the U.S. government can continue to operate after the temporary funding agreement expires on November 17. These unresolved issues could have a significant impact on the encryption industry.

In Washington, there are not many politicians who truly support encryption currency. Mike McHenry, as one of the few legislators with a friendly attitude towards the encryption industry, has attracted significant attention for his position. Last week, he threatened to issue a subpoena regarding the communications between Gary Gensler, the chairman of the SEC, and the collapsed encryption exchange FTX.

Currently, McHenry also serves as the chairman of the Financial Services Committee. However, this position may change soon. A regulatory affairs expert stated that if McHenry is forced to become the Speaker, he would have to give up the chairmanship of the Financial Services Committee. This could lead to the committee losing an important encryption supporter, thereby affecting the progress of related legislation.

Another cryptocurrency supporter, Tom Emmer, who is seen as a potential successor to McCarthy, stated last week that he has no intention of pursuing the speakership.

In addition to political changes, the risk of government shutdowns has cast a shadow over the encryption market. The head of institutional research at a trading platform pointed out in a recent report that government shutdown events could exacerbate market volatility in the short term. The turbulence of traditional risk assets may spill over into the encryption sector, but this impact may be temporary. Digital assets like Bitcoin are expected to recover quickly, as they typically hedge well against the inherent risks of the traditional financial system.

Although the threat of a government shutdown has been temporarily lifted, this challenge will arise again in 44 days, and the market will continue to be affected. It is worth noting that the agreement reached last Saturday ensures that the Federal Reserve will not be impacted. If the government shuts down, it will be difficult for the Federal Reserve to obtain key economic data, such as the inflation report for September.

Despite avoiding this issue, there are still other adverse factors. A certain trading platform predicts that the Federal Reserve may continue to raise interest rates at the meeting on November 1, which would lay the foundation for a market rebound before the end of the year. According to data from the Chicago Mercantile Exchange, the probability of an interest rate hike on November 1 is 20%.

McCarthy took office as Speaker on January 7 this year, making him the third-shortest-serving Speaker in American history. He pushed through a bill at the last moment to avoid a government shutdown, a move that angered some of his colleagues, particularly the far-right Republicans in the House. Republican Matt Gaetz introduced a motion to vacate, demanding that McCarthy disclose the details of the funding agreement with the Biden administration regarding the Ukraine war.

In this political turmoil, the encryption industry faces the risk of losing important allies. The future policy direction will directly affect the development of the encryption market, and industry insiders need to closely monitor the latest developments in Washington.