Bitcoin
Trump and Bitcoin Politics
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The stories that matter about money and politics in the race for the White House
Bitcoin is to its devotees what the communion wafer is to Catholics — an article of faith. It also comes with a collection box. It’s a safe bet that Donald Trump’s recent conversion to bitcoin is motivated by the large donations that come with it. Which puts his Democratic opponent Kamala Harris in trouble. Harris would like to protect retail investors from an asset class that often resembles a Ponzi scheme. But America has an army of crypto investors — some 40 million strong — that cannot be disrespected in a close election.
In practice, most serious cryptocurrency investors already be voting for Trump. To Trump’s surprise, he discovered at a bitcoin conference last weekend that his bête noire is Gary Gensler, chairman of the Securities and Exchange Commission. Gensler believes crypto should be regulated. “I didn’t know he was so unpopular,” Trump said after a prolonged celebration. “Let me say it again, on day one I will fire Gary Gensler.” This also came as a surprise to many Democrats, who had little idea that Gensler was a George Soros-like demon in the crypto world.
Bitcoin Policy in the US is both electoral and substantive. The voting part is easier to understand. Many have questioned Trump’s decision to select J.D. Vance, the Ohio senator, as his running mate. By conventional measures, Vance was a disastrous choice. His approval ratings are below average. His standing with most female voters is surprisingly low, given his disdain for those who choose not to give birth or are unable to do so.
But Vance is backed by some of the wealthiest people in America. Among them are Silicon Valley giants Elon Musk, Peter Thiel, Marc Andreessen and Ben Horowitz. Each is invested, both financially and philosophically, in cryptocurrency. As analysts weigh in on Vance supposedly populist economy — his support for breaking up trusts, for example, and his blaming of Wall Street for the woes of the American working class — others are following the money. In his short Senate career, Vance sponsored legislation to deregulate cryptocurrency. He calls Gensler “the worst person” to oversee the asset class.
This coincides precisely with Vance’s views West Coast Sponsors. Thiel contributed $15 million to Vance’s Senate campaign. Musk promised, but has since cast doubt on, the $45 million a month he promised Trump the day before Vance was announced. Andreessen and Horowitz have come out in favor of Trump. Cryptocurrency donors to Trump’s campaign include Cameron Winklevoss, co-founder of the Gemini cryptocurrency exchange, and Jesse Powell, co-founder of the Kraken cryptocurrency exchange.
The name Kraken hints at the substantive politics behind bitcoin. The mythical Norse sea monster is an alt-right symbol of populist anger at the US federal machine. Kraken will rise from the waters to rescue the US republic from degeneration. The monetary part of Kraken’s revenge is bitcoin. Like the gold rushers of old, cryptocurrency enthusiasts believe that “fiat money”—government-issued money not backed by a commodity like gold—is the root of all financial evil.
For people like Thiel and Musk, Bitcoin is both a technological and political expression of what they believe in. Bitcoin exists only because of blockchain technology, which speaks to the genius of West Coast innovation. Bitcoin is also an essential weapon with which to realize their wildest political dreams. Both men believe they are Gullivers trussed up by a low-IQ government. Thiel has even suggested that democracy is incompatible with capitalism. In their view, the US Federal Reserve is the deep state at its most corrupt. Bitcoin is how they blow it up.
All of this is gibberish to most voters. For Harris, the sensible position is a benign neutrality toward crypto investors without making deregulatory promises she would regret if elected. If Franklin Roosevelt managed to win in 1940 without taking his hat off to fight fascism, Harris could certainly manage the necessary ambiguity about cryptocurrencies. She should be careful not to repeat that the Fed will likely issue a digital unit of account. Bitcoin devotees see CBDC — a central bank digital currency — as a deep state surveillance tool.
If Harris and Trump debate—a big if—it would be surprising if Trump remembered what CBDC means. Since China’s central bank has launched a digital currency, the U.S. has to preserve that option. If Trump were elected, unregulated bitcoin would get a rocket boost. He’s also promised to import the roughly $13 billion in bitcoin seized by the government onto the Fed’s balance sheet. That would be a Trojan horse. Add a war on the dollar to the radical changes a second Trump presidency would bring.