(Bloomberg) — In 2019, former President Donald Trump declared he was not a fan of cryptocurrencies because their value was based on “air” and could facilitate drug trafficking and other crimes.
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What a difference five years, millions of dollars in donations and another tight presidential race can make. With less than four months until the election, crypto lobbies have rallied behind the soon-to-be Republican nominee as his supporters hope his political fortunes are on the upswing after he survived the July 13 assassination attempt.
And the industry’s wish list for a possible second Trump term is becoming clear: At the top, there’s a more hands-off approach from regulators who cracked down on crypto companies after the collapse of the FTX exchange and other scandals, bankruptcies and criminal cases under President Joe Biden.
“Under Trump, you’re not going to see bank regulators forcing banks to close crypto companies’ bank accounts,” said Brian Morgenstern, head of public policy at crypto miner Riot Platforms Inc., who worked in the White House and Treasury during the Trump administration. “He would not use the Department of Energy to single out Bitcoin miners.”
The finer details of Trump’s crypto policies are not yet clear. But based on his public statements echoed by the Republican National Convention platform, some potential winners and losers emerge. Trump has vowed to encourage Bitcoin mining in the U.S., protect the self-custody of cryptocurrencies and block the Federal Reserve from issuing a central bank digital currency that would compete with the industry. The former president wants the country to lead the nation in developing new technology, Brian Hughes, a senior campaign adviser, said in a statement.
“Crypto innovators and others in the tech sector are under attack from Biden and the Democrats,” Hughes said. “While Biden stifles innovation with more regulation and higher taxes, President Trump is ready to promote American leadership in these and other emerging technologies.”
Bitcoin Talk
More details about Trump’s plans could emerge at this week’s Republican convention and during Trump’s speech at the Bitcoin 2024 conference on July 27. Trump’s former GOP primary rival, entrepreneur Vivek Ramaswamy, said he has held talks with Trump about what crypto policy should look like, echoing a common refrain in the crypto space that regulations governing the industry need to be clarified, despite the government’s numerous enforcement actions making its stance clear.
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“People should know what the real rules are under which they have to operate,” Ramaswamy said in an interview. “You can disagree about the rules, but you should not disagree on the principle that people should know what the rules really are.”
Ramaswamy is far from the only voice advising Trump on crypto. Vice presidential candidate Republican Sen. J.D. Vance of Ohio has long been a crypto advocate, and the former president has also held talks with Tesla Inc. CEO Elon Musk on the subject.
Trump met with buyers of Trump-themed digital trading cards at his Mar-a-Lago Club in May and hosted Bitcoin miners there last month. Trump, several policy advisers, and Tennessee Republican Sen. Bill Hagerty met with executives from about eight crypto miners, including Marathon Digital Holdings, CleanSpark Inc. and Riot. CBDCs, U.S.-China competition and miners’ ability to adapt to the needs of the energy grid were among the topics discussed, said Jayson Browder, senior vice president of government affairs at Marathon. In the week they met with Trump, several of the largest miners backed the Bitcoin Voter Project, a pro-crypto effort to influence voters.
Some right-wing think tanks, such as the Heritage Foundation and Trump’s Republican allies in Congress, have also become more vocal on the issue.
‘Common Vision’
“I’ve spent a lot of time talking to the president about this sector and what we’re seeing, and I think a common vision is emerging in our Republican platform,” Senator Hagerty said on Bloomberg’s Balance of Power on July 10, adding that he sees crypto as a “defining issue” in the election. “We have an innovative DNA here that goes beyond any other nation. We need to capitalize on that.”
Trump’s transformation in stance on crypto was driven by a combination of factors, including the sector’s growing political and fundraising appeal, according to close allies, campaign advisers and crypto executives who have discussed the issue with Trump. His campaign confirmed that it was a natural result of contact with people in his orbit who shared a wealth of knowledge on the subject.
Donations from the likes of billionaire twin brothers Cameron and Tyler Winklevoss, who founded the Gemini cryptocurrency exchange, soon followed his change of heart.
‘The Wedge Problem’
But the crypto industry is hoping Trump’s embrace of digital assets will resonate with voters beyond just deep-pocketed donors. A recent survey by crypto venture capital firm Paradigm found that 28% of Republicans have invested in, traded, or used crypto, and 13% of Republicans who don’t plan to vote for Trump said his new pro-crypto stance could change their views. Many crypto investors are under the age of 40 — a demographic that presidential candidates always want on their side.
“Trump sees that division and he uses it as a divisive issue,” said Marathon’s Browder, who recently met with Trump. “It makes sense politically: We believe these voters will vote.”
Indeed, even the Biden administration has opened its doors to the crypto industry ahead of an election that could ultimately be determined by a relatively small number of voters in swing states. Last week, about 30 crypto insiders, including Ripple CEO Brad Garlinghouse and Coinbase Global Inc. Chief Legal Officer Paul Grewal, met with a White House advisor to air their frustrations and demand specific changes to policies. Coinbase said it is apolitical and instead advocates for pro-crypto candidates in both parties while trying to sideline anti-crypto candidates with its support for the Fairshake SuperPAC.
Of course, all the donations and interest are being fueled by a notorious boom-and-bust asset class in the middle of a boom phase. Many of the crypto companies that survived the last bear market are now thriving, as Bitcoin trades near its all-time high from March, reached after exchange-traded funds that invested directly in the original cryptocurrency were launched in January. Coinbase’s stock is up nearly 40% since the beginning of the year, while the stock price of MicroStrategy Inc., the world’s largest institutional holder of Bitcoin, has more than doubled.
Yet the fortunes—and in some cases, the survival—of many crypto businesses are threatened by ongoing government lawsuits and other regulatory pressures. Enforcement actions and investigations, particularly from the Securities and Exchange Commission, have affected nearly every major crypto company, from the largest U.S. exchange, Coinbase, to the decentralized exchange Uniswap. Meanwhile, banking regulators have made it harder for crypto businesses to open and maintain accounts.
Other companies, such as miners whose machines support the processing of cryptocurrency records, have their own complaints about the Biden administration, such as the proposed excise tax on mining.
Industry insiders hope a new administration can iron out many of these issues, perhaps through executive orders or the appointment of a new pro-crypto SEC chairman.
‘Rest-Rest’
Still, it’s unclear how far Trump’s embrace of digital assets will go. After all, cryptocurrency markets are notoriously fickle, and much could happen between now and the start of his next presidential term to revive Trump’s previous resistance to an asset class notorious for scandals and “in the air” valuations.
But for now, at least, cryptocurrency executives seem content with Trump making the noise they want to hear.
“All Trump had to do was say, ‘Come on, man, let’s go with Bitcoin,’” said Dan Tapiero, who runs digital asset investment firms 1RoundTable Partners and 10T Holdings. “That was the lowest bar to get people excited in our space.”
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