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At Bitcoin 2024 in Nashville, lines wrap around the block. Delays. The crowd awaits. Rumors swirl. Then the music comes on, and much of the audience stands in awe as Trump walks on accompanied by patriotic music.
“There’s no way Kamala Harris could have come here”, I overhear someone comment.
It certainly seems that Bitcoin — or at least its most ardent and vocal US supporters — has become heavily tilted toward the Republican. Gone are the days when the core of enthusiasts described their project as a politically neutral technology.
This conference features bins of free “VOTE TRUMP” t-shirts and Bitcoin Media CEO David Bailey introduces Trump as “soon to be the 47th President!”
Such partisanship was absent during the 2020 and 2016 elections. So why have libertarian Bitcoiners suddenly embraced Trump, a politician whom many Democrat pundits claim is a “dangerous authoritarian”?
One big hint comes when Trump announces on stage that he’ll put an end to Operation Choke Point 2: an initiative blamed for endless crypto firms being refused banking services.
With palpable emotion, a spectator sitting nearby me jumps up to give a heartfelt standing ovation. Afterward he explains that the debanking scheme had brought his US-based crypto investment fund to a standstill.
“We suddenly lost access to banking earlier this year, it was a huge struggle to pay staff while searching for a new bank.”
In his view, Trump offers the only hope of his business continuing as normal.
Many others in the crypto industry have similarly begun to view the election as a do-or-die choice between having their crypto portfolios and businesses wiped out by the Democrats or having them given a new lease of life by the Republicans.
But since Bitcoin 2024 the political landscape has been transformed, with Trump moving from favorite to underdog after Kamala Harris replaced Joe Biden as the Democrat candidate. Rightly or wrongly, the optics of the race now make it seem as if Trump is the old man battling against the “change candidate.”
Pollster Nate Silver said this week that Harris “leads by 3.8 points in our national polling average and would be a clear favorite in an election held today.”With 67 days until November’s election, anything could still happen, but the industry might be tying its fortunes to a sinking ship.
Here’s me holding a 1 BTC Casascius physical Bitcoin worth ~$100,000, hours before it was given to Donald Trump on stage at Bitcoin 2024 in Nashville. Giver is anonymous & I promised not to spill the beans on Trump’s new BTC address. Apparently this is now framed in his office. pic.twitter.com/pBwnb7tc7e
— Elias Ahonen.eth (@eahonen) August 25, 2024
Donald Trump’s U-turn on Bitcoin and cryptocurrency
So how did the Bitcoin industry arrive at this point? Critics like to point out that when he was president, Trump had a similarly dismissive attitude to crypto as many in the Democratic party. In 2019, he infamously tweeted that “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money,” and that “unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.” He reaffirmed his stance on “Bitcoins” to Fox Business in August 2021, saying “I think they should regulate them very, very high.”
The first hint of Trump’s Bitcoin epiphany came in March this year when he told CNBC’s Squawk Box that he’s “not sure I’d want to take it away at this point” when discussing “crazy new currencies” amid the Securities and Exchange Commission’s recent approval of Bitcoin ETFs. His interest and knowledge of the industry appear to have been fuelled by excitement regarding the financialsuccessof Trump-branded NFTs.
Two months later, on May 8th, hehostedNFT enthusiasts at his Mar-a-Lago home, where he took partial credit for “making NFTs hot again” through his projects, which now include NFT sneakers, trading cards and mugshot collections. This is where he took a firm stance on crypto, positioning himself as the industry’s defender against SEC boss Gary Gensler and the Democrats.
“Gensler is very much against it. The Democrats are very much against it. I’m fine with it, I want to make sure it’s good and solid and everything else, but I’m good with it.”
Two months later, on July 10th, Trump’s attendance at Bitcoin 2024 was announced. The political u-turn was complete just as Trump began to firm up as the favorite, and doubts increased over Joe Biden’s age and ability to handle another term.
Democrats’ ‘anti-crypto army’ changed perceptions
At Bitcoin 2024, there is talk of “the orange party” — the mass of Bitcoiners and the wider crypto community whom the former president and red-party candidate has come to woo for votes. Given the industry’s gripes with the Democratic party, the support of the orange party is low-hanging fruit for Republican strategists.
Perhaps the clearest display of the Democrats’ abandonment of the crypto community can be seen through the actions of Senator Elizabeth Warren, who sits on the Senate Banking Committee and frequently suggests the only use for crypto is for money laundering, drugs, human trafficking, Iran and North Korea.
Since 2022, she has supported a number of anti-crypto bills, and in March 2023, her campaign tweeted a campaign image declaring that she was “Building an Anti-crypto Army” (based on a Politicoarticle.)
In contrast, in May the Trump campaign declared it was building a crypto army to defeat the Democrats and announced it will accept donations in a number of cryptocurrencies,
“MAGA supporters, now with a new cryptocurrency option, will build a crypto army moving the campaign to victory on November 5th!” the campaign said.
With the statement, the stage was set for the 2024 election to be in part a crypto war.
Operation Choke Point 2.0 targets the crypto industry
One of the most successful elements of this partisan crypto war has been the apparent resurrection of Operation Choke Point, originally a 2013-2017 initiative to scrutinize bank dealings with companies engaged in high-risk financial activity, such as pawn shops, gun and ammunition dealers, money transfer networks and payday loans. This regulatory pressure resulted in banks unilaterally terminating banking services to otherwise legitimate clients.
I don’t want to alarm, but since the turn of the year, a new Operation Choke Point type operation began targeting the crypto space in the US. it is a well-coordinated effort to marginalize the industry and cut of its connectivity to the banking system – and it’s working
— nic carter (@nic__carter) February 7, 2023
In 2023 Coin Metrics co-founder Nic Carter suggested that Operation Choke Point 2.0 had resumed and was now aimed at crypto. A joint statement by the Federal Reserve, FDIC and the Office of the Comptroller of the Currency in January claimed that crypto represented a “significant risk” for banks and was “inconsistent with safe and sound banking practices.”
The collapse of two of the only remaining crypto-friendly banks, Silvergate and Signature, in March 2023 put enormous pressure on the industry. Trump’s former acting White House chief of staff, Mick Mulvaney, told Bloomberg that month that “we’re starting to hear rumors of the same sort of thing within crypto — if you’re in the blockchain or crypto business, it’s getting harder and harder to find somebody to just give you the old-fashioned banking that you need to operate.”
So when Trump told the crowd at Bitcoin 2024 that he would fight to release the choke hold, the room went crazy:
“As president, I will immediately shut down Operation Chokepoint 2.0. They want to choke you. They want to choke you out of business. We’re not going to let that happen.”
Democrats blamed for the SEC’s war on crypto
While the SEC is independent from the government, Biden appointed its chairman, Gary Gensler, in 2021. Since the fall of FTX in 2022, the SEC has launched an all-out assault on crypto. Instead of just taking on fraudulent schemes and bad actors, the SEC has targeted some of the industry’s best players, including Coinbase and Uniswap. If the industry sees a villain in Washington who is driving crypto away from the US — and they largely do — it’s Gensler.
“We’re going to fire Gary Gensler and appoint a new SEC chairman.”
Before the sentence is finished, the crowd erupts in a thunderous standing ovation and cheers.
Trump is clearly taken aback. “Well, I didn’t know he was that unpopular!” he exclaims, then decides to go off script to milk the applause. “Let me say it again. On day one, I will fire Gary Gensler. I will appoint a new SEC chairman who believes America should build the future, not block the future, which is what they’re doing.”
As many have pointed out, Trump doesn’t necessarily have the power to carry out that promise, although he can no doubt make life extremely unpleasant for Gensler.
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Trump promises to slay CBDC
Trump also promises to slay another political boogeyman, CBDCs, or central bank digital currencies. As centralized, government-backed digital currencies, they are the antithesis of crypto’s libertarian ethos, and disapproval is palpable in Nashville, where anti-CBDC stickers can be found strewn upon tables.
This anti-CBDC view is supported by Ron DeSantis, the governor of Florida and an influential Republican, who says that “a centralized bank digital currency is about surveillance and control.” In March 2023, DeSantis announced legislation to “protect Floridians from the Biden administration’s weaponization of the financial sector through a CBDC.”
A year later, in February 2024, Texas Senator Ted Cruz introduced a bill banning CBDCs because “the Biden administration salivates at the thought of infringing on our freedom and intruding on the privacy of citizens to surveil their personal spending habits.”
Trump says:
“The creation of a central bank digital currency is over. Forget it. CBDC. There will never be a CBDC while I’m President of the United States.”
Cue thunderous applause from the Nashville crowd.
Whether or not a coming Trump administration blocks the creation of a US federal CBDC, CBDCs are coming to other parts of the world. The People’s Bank of China has already introduced the digital yuan and integrated it with popular payment apps. The European Central Bank has been developing a digital euro since 2021 and there are similar initiatives in the UK, Japan and dozens of other countries.
Should crypto be a Republican industry?
Given these pronouncements, it’s reasonable to expect that a Trump presidency would boost crypto mining, development, and investment activity within the US along with introducing a clearer regulatory framework. This would lead to downstream increases in users and ultimately, higher prices.
But is it wise for the blockchain movement to align itself politically with Republicans, and Trump specifically? It’s certainly not improving crypto’s image — to Democrats or moderate voters — to have formerly respected industry leaders go full MAGA in public.
Consider the case of Ryan Selkis, who was the CEO of crypto research firm Messari before stepping down in July after a spate of unprofessional tweets rallying the crypto community to literal war against “leftists”.
Such hyper-partisan stances can be problematic, as they may cause the other party to view the industry as its political opponent to be defeated, rather than a “swing state” to win over.
Putting all your eggs in one basket is not a good investment strategy, especially with Kamala Harris’ current lead in the polls. It’s also notable that crypto is not seen through a partisan lens in most of the world, so forcing it into one in the US may cause discomfort to a majority of users.
However, by speaking in Nashville, Trump has demonstrated the political significance of the blockchain industry and sent Democratic strategists back to the drawing board to redefine the party’s approach to the technology in an attempt to regain trust.
They’re also keenly aware that Fairshake is now the largest Super Political Action Campaign, raising more money than Make America Great Again Inc and determined to spend those funds to influence the outcome of elections featuring anti-crypto candidates. According to watchdog Public Citizen, the industry has spent $119 million on this election so far, and of the 42 primary campaigns in which it donated, crypto-backed super PACs’ favored candidates won 36 times.
There are some green shoots and signs the Democrats are beginning to change course, with the formation of the Crypto4Harris campaign and two recent meetings between White House officials and crypto leaders to discuss the issue. There’s nothing concrete as yet, but on Aug. 21, senior Harris policy adviser Brian Nelson was asked specifically about Harris’ stance on crypto. He sounded a positive note for the industry:
“She’s going to support policies that ensure that emerging technologies and that sort of industry can continue to grow.”
He also acknowledged that “obviously, they’ve expressed that one of the things that they need are stable rules, rules of the road.”
Will Harris address the crypto issue directly during the campaign, and offer a competing vision to Trump and once again make crypto a bipartisan question? Simply by calling off the anti-crypto army, she has the opportunity to earn some powerful allies.
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Elias Ahonen
Elias Ahonen is a Finnish-Canadian author based in Dubai, who bought his first Bitcoin in 2013 and has since worked around the world operating a small blockchain consultancy. His book Blockland tells the story of the industry. He holds an master’s degree in international and comparative law and wrote his thesis on NFT and metaverse regulation.