Donald Trump is leaning in on all things ‘crypto’ despite a glaring absence of firm policy positions and a Congress that remains divided on how to regulate digital assets.
On June 7, Reuters reported on a fundraising meeting Trump had with tech sector luminaries in San Francisco the day before. The meeting, from which Trump reportedly garnered $12 million in campaign contributions, was held at the home of David Sacks, who organized the meet-up at his home with the help of Chamath Palihapitiya. The pair co-hosts the popular All-In podcast alongside Jason Calcanis and David Friedberg.
Trevor Traina, a tech investor who previously served as ambassador to Austria during Trump’s presidential term, said Trump told his audience that “he would be the crypto president.” Other attendees claimed Trump ‘touted crypto as important and stressed that he was very supportive of the sector’ but failed to offer much in the way of specifics.
Jacob Helberg, an adviser to Peter Thiel‘s Palantir software firm, told Reuters that Trump “made clear that the Biden-Gensler crusade against crypto will grind to a halt within one hour of a second Trump administration.” Others in attendance included the Winklevoss twins behind the Gemini digital asset exchange and executives from Coinbase (NASDAQ: COIN).
A White House spokesperson claimed Biden’s administration had supported digital asset innovation while simultaneously protecting consumers from “risks associated with new technologies.” The spokesperson added that Biden remained open to working with Congress to craft a thorough regulatory framework for digital assets.
Earlier this month, Biden vetoed a bill approved by both legislative chambers that would have overturned a digital asset custodial policy imposed by the Securities and Exchange Commission (SEC). Many critics of the SAB121 accounting change claim it disincentivizes traditional financial institutions from custodying digital assets, thereby ensuring less protection for consumers, not more.
After years of dismissing digital assets as scams, Trump made a dramatic about-face this year, first admitting that certain digital assets had “taken on a life” of their own, then declaring that he was “fine” with digital assets while claiming Biden “has no idea” about the sector and Gensler/Democrats are “very much against it.”
Trump even promised to commute the sentence of Ross Ulbricht, whose Silk Road dark web marketplace offered crypto-based sales of illegal drugs and weapons. Trump’s promise came as a shock to those who recalled Trump’s previous declaration to impose death sentences on drug dealers.
Over the weekend, billionaire Mark Cuban publicly questioned whether Trump “understands anything about crypto? Beyond saying he made money selling NFTs?” Cuban suggested Biden didn’t know anything either, but warned that the incumbent “has to choose between Gensler or crypto voters or it could cost him the Whitehouse” [sic].
Single-issue ‘crypto’ voters were already on record as preferring Trump over Biden, and Trump’s San Francisco love-in is simply the latest sign of his cornering this market. Given that the pronounced lack of Biden love amongst many ‘crypto bros’ isn’t all that new, it remains to be seen whether Biden’s digital asset stance is actually costing him any votes he had no hope of securing anyway.
Musk read
As for where Trump is gleaning his ‘crypto’ insights, occasional digital asset advocate Elon Musk says don’t look at him. Musk was responding to a Bloomberg report that claimed the Tesla (NASDAQ: TSLA)/X/SpaceX) operator had “discussed crypto” with Trump. That report followed a Wall Street Journal that claimed Trump was mulling a “possible advisory role” for Musk should Trump retake the White House come November.
Musk issued a half-hearted denial via his X account, saying he was “pretty sure I’ve never discussed crypto with Trump, although I am generally in favor of things that shift power from government to the people, which crypto can do.” Musk added that, “I love how legacy media just wakes up and goes ‘hmmm, let’s write about Elon, Trump and crypto,'” added a crying-laughing emoji for further emphasis.
Like Trump, Musk has run hot and cold on digital assets, expressing intermittent love for Dogecoin, then having Tesla buy US$1.5 billion worth of BTC and announcing that Tesla would accept BTC payments for electric vehicles. Tesla quickly scrapped that plan as unworkable due to the BTC token’s price volatility, then dumped 75% of its BTC holdings as Musk dismissively declared that “cryptocurrency is a sideshow to the sideshow.” So be careful what you wish for, crypto bros.
Paying the piper to call the tunes
Trump’s Damascene conversion to ‘crypto’ advocate was almost certainly based on his desire to accept campaign contributions from the sector’s deep-pocketed individuals/entities. This pay-to-play ethos is no doubt behind the surge of cash flowing into the Fairshake political action committee (PAC), which garnered $75 million in fresh funding in recent weeks.
A couple of weeks ago, Ripple Labs donated $25 million to Fairshake and affiliated PACs, doubling down on the $25 million in donations the company made last year. Ripple CEO Brad Garlinghouse told Axios that the donation “isn’t a one-time thing,” and Fairshake could expect $25 million on an annual basis until the tone in Washington turns crypto-positive.
Ripple’s official statement on the donation quoted Garlinghouse saying Ripple “will not—and the crypto industry should not—keep quiet while unelected regulators actively seek to impede innovation and economic growth that millions of Americans utilize. The crypto industry intends to remain heavily invested in this effort until we see meaningful change.”
Garlinghouse wasn’t exaggerating, as Ripple’s $25 million top-up was almost immediately followed by identical contributions from Coinbase and Andreessen Horowitz’s crypto arm a16z. The tandem contributions bring a16z’s total outlay to Fairshake and “related entities” to $47 million, while the tally from Coinbase and its execs is now around $52 million.
The outlays pushed Fairshake’s electoral war chest over $160 million, which, in combination with funds raised by those ‘related entities,’ ranks Fairshake et al in the top-five of PACs spending big on (and against) candidates in the 2024 election cycle.
Stand with Sock Puppets
Super PAC donation figures are fairly easy to verify—even more so when the contributors brag publicly about it—but you can’t say the same for some other numbers at the intersection of crypto and politics. For instance, Coinbase CEO Brian Armstrong recently claimed that his exchange’s advocacy group, Stand with Crypto, had signed up one million members. As Armstrong put it, “That’s a lot of voters!”
Possibly. It could also be a lot of bots, sock-puppets and other methods of artificially inflating numbers that support one side of a hot-button issue. As some comical videos have made clear, signing up for Stand with Crypto requires nothing more than entering a name and an email address, with no verification whatsoever of the data submitted and no captcha to solve.
This has allowed prominent individuals like Biden and Abraham Lincoln to express their solidarity with Coinbase’s political aims, which in Lincoln’s case is seriously impressive considering he’s been dead for seven score and 19 years. Still, the Honest Abe we know wouldn’t steer us wrong, so we can’t wait to see his embalmed figure out on the hustings standing and/or propped up with crypto.
Coinbase is notorious for circulating obviously bogus statistics that amplify its own views, including the claim that “52 million Americans own crypto.” A slightly more plausible finding of 7% of U.S. adults having ‘held or used’ digital assets in 2023 came via a recent Federal Reserve survey.
As other sharp-eyed observers have detected, Coinbase’s recent claim that Stand with Crypto’s ‘crypto advocates’ have donated over $87 million to the cause appears to count the company and its deep-pocketed execs among those ‘advocates.’
In reality, Stand with Crypto itself has raised less than $1.2 million, and $1 million of that came from a single organization (MoonPay). Meaning that those million ‘advocates’ each donated an average of less than $7. Given that level of commitment, Coinbase shouldn’t necessarily count on all these ‘voters’ spending the money on the gas it will take to get to the polling station.
Coingress
Crypto advocates greeted the House of Representatives’ recent approval of the FIT21 bill with rapturous delight, particularly since it passed with significant support from the Democratic side of the aisle. But the bill’s fortunes in the Senate appear far less certain, with Democratic senators expressing skepticism that any pro-crypto bills will make it through the dwindling number of sitting days in this election-shortened calendar.
Even pro-crypto Dem Sens aren’t optimistic about FIT21’s progress, with Ron Wyden (D-OR) suggesting last week that the lateness of the hour makes passage this year unlikely. But with momentum gathering and a possible turnover of some staunch anti-crypto types in November, chances of passage in the next Congressional session could prove far smoother sailing.
Meanwhile, a late addition to a must-pass piece of legislation has crypto operators sweating buckets. Sen. Mark Warner (D-VA) has stapled language from his Terrorist Financing Prevention Act into the Intelligence Authorization Act for Fiscal Year 2025, a funding bill that recently advanced with unanimous consent from the Senate Select Committee on Intelligence—including Sen. Wyden.
Warner’s language would prohibit transactions between U.S. individuals and “foreign digital asset transaction facilitators” that the feds have flagged for knowingly transacting with terror groups or sanctioned individuals/entities.
The prohibition defines the aforementioned facilitators as “any foreign person or group of foreign persons that, as determined by the [Treasury] Secretary, controls, operates, or makes available a digital asset protocol or similar facility, or otherwise materially assists in the purchase, sale, exchange, custody, or other transaction involving an exchange or transfer of value using digital assets.”
‘Digital asset protocol’ includes smart contracts and other software tools that provide “a mechanism for users to interact and agree to the terms of a trade for digital assets.” This has left both operators and users of exchanges and decentralized finance (DeFi) protocols feeling particularly nervous.
However, once passed on the Senate floor, the bill would have to be reconciled with a similar House effort. This would give pro-crypto House reps the opportunity to modify or strip Warner’s language from the finished product before it heads to Biden’s desk for his signature. Time for Fairshake to spend some of that capital.
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