Regulation
Trump is suddenly all about cryptocurrencies. What has changed?
The blockchain industry is trying to figure out whether it can trust its new supposed ally.
Republican presidential candidate Donald Trump has made a U-turn on his stance on the cryptocurrency industry.
Just three years ago, Trump called Bitcoin a “scam.”“, and last week the former president embraced cryptocurrency donations, saying he would commute the sentence of Bitcoin market creator Ross Ulbricht and said that under his leadership he would not allow cryptocurrency builders to leave the country.
“Our country must be the leader in this field, there is no second place,” Trump said in a May 25 press conference send on Social Truth. “I’m very positive and open-minded about cryptocurrency companies and everything about this new and thriving industry,” she said.
The sudden change from Trump has some in the cryptocurrency industry wondering whether they can trust the former president to follow through if he makes it to the White House. Others wonder if they should overlook any qualms they may have and support him just because of his pro-cryptocurrency stance.
Sudden change
It was a confluence of factors over the years, but the gradual and then sudden moment took place on May 8, during a gala dinner at Mar-a-Lago for supporters who purchased his NFT collection with his mugshot of his prison surrender in Georgia.
Malcolm Castañeda, chief of staff of the NFT project, DeGods who was present at the event, probed Briscola.
Castañeda explains that the company he works for advised the Trump team overseeing his NFT collections, and that DeGods was invited to participate in the Mar-a-Lago event.
He told The Defiant that they were prepared to publicly ask what the former president planned to do in light of the hostility the cryptocurrency industry has received from senior government officials, including the chairman of the Securities and Exchange Commission (SEC) Gary Gensler and US Senator Elizabeth Warren.
“Many of the smartest people in the cryptocurrency world are leaving the country because of U.S. regulations,” said Castañeda, who then asked Trump what he would do to stem the brain drain.
Trump said his government would end the hostility the industry has faced from the current administration, although he did not elaborate on specifics.
“We will accommodate them if we want them to say so,” he said.
Is Trump serious?
This sudden change in tone gave experts pause.
“Trump is going all out for these voters: He promised to roll out the red carpet for the cryptocurrency industry in the US and release jailed cryptocurrency programmers,” political commentator Rajgopal Menon, vice president of the exchange, told The Defiant of WazirX cryptocurrencies. “This has put the cat among the pigeons, as evidenced by the hasty approval of Ethereum ETFs. No politician can hope to be elected after antagonizing the crypto voter,”
But others, like Adam Cochran, partner at Cinneamhain Ventures, shared strong reservations about Trump’s pro-crypto stance.
“Just like Biden, Trump was previously anti-cryptocurrency and is pandering to votes,” he said. “Trump is not someone who honors his transactions.”
Meanwhile, others are not surprised by the change in opinions.
Jonathan Thomas, CEO and co-founder of Blueberry Protocol is one of them.
“Cryptocurrencies have increased their presence between the last and current presidential elections, from the FTX collapse to the ETF approvals,” he told The Defiant. “Candidates like Trump are trying to get every vote they can, and cryptocurrencies have become important to earn.”
And since there are some who see the scenario playing out as it is now, optimists abound.
Potential scenarios
For cryptocurrency lawyer James Murphy, also known as “MetaLawMan”, Trump’s possible victory in the upcoming November elections could lead to the dismissal of several lawsuits against the SEC.
Murphy anticipates “a very different SEC” based on Trump’s recent statements in favor of cryptocurrencies. “I could imagine voluntary dismissals of cryptocurrency cases [SEC Chair] Gary Gensler’s regime began where there was no fraud and no victims.”
Trump joins the ranks of presidential hopefuls Robert F. Kennedy Jr., Rand Paul and Andrew Yang, who have all embraced cryptocurrency contributions to their campaigns. Trump’s 2024 campaign donation page prominently features logos for Bitcoin (BTC), Ether (ETH), Dogecoin (DOGE), Shiba Inu (SHIB), XRP, USD Coin (USDC), Solana (SOL ) and 0x (ZRX).
Trump isn’t just embracing cryptocurrencies; His holdings also increased. On-chain data briefly shows Trump’s crypto asset portfolio passed Monday 10 million dollars.
A push against Biden
Another big reason for Trump to support cryptocurrencies closer to the election, according to experts, is to leverage Biden’s anti-cryptocurrency stance in his favor.
The Biden administration, through the SEC, has been tough on the cryptocurrency industry.
In March 2022, Biden released an executive order for comprehensive regulation of cryptocurrencies and the exploration of a U.S. central bank digital currency (CBDC).
Biden has also proposed a 30% tax on electricity used by crypto miners, citing environmental concerns. Historically, his administration has been wary of unregulated cryptocurrencies due to risks such as money laundering and fraud.
And the SEC has relentlessly pursued a regulatory agenda through enforcement against cryptocurrencies. The agency recently he threatened to sue the decentralized exchange Uniswap and last year, in June, the SEC went against Coinbase and Binance, accusing both companies of violating US securities laws.
Authorities have also targeted several crypto projects, labeling a number of tokens as Solana and Cardano, unregistered securities.
The Trump campaign has criticized Senator Elizabeth Warren, labeling her a “Biden surrogate” and accusing her of forming an “anti-crypto army” to limit Americans’ financial freedoms. In response, the campaign promised that MAGA supporters would form a “crypto army” to ensure victory on November 5.
Bipartisan support
Notably, the change in Trump’s views also triggered a 180 by Democrats.
Two crypto bills, HJ Res. 109 and the Financial Innovation and Technology for the 21st Century Act (FIT21), have garnered bipartisan support, indicating a shift in legislative attitudes toward cryptocurrency.
The House made a move by passing the FIT21 legislation by a vote of 279-136 to establish a regulatory framework specifically designed for cryptocurrency. This marks the first time either house of Congress has taken such a step.
Dozens of Democrats, including Senate Majority Leader Chuck Schumer, have distanced themselves from Elizabeth Warren’s anti-cryptocurrency stance in recent days.
This bipartisan move was driven by a mix of cryptocurrency advocacy, bank lobbying, and frustration with the SEC under Gensler.
Schumer said in a statement: “New York State already has a strong law on the books and they were not consulted on this regulation.”
Thomas noted that both parties will do what they can to appease crypto voters. “It will probably be a competition between who can outdo the other to advance cryptocurrency regulation,” he said.
Legal challenges
Trump’s decision to embrace cryptocurrency comes amid ongoing legal challenges.
He faces 88 criminal charges in four cases: two in federal courts and two in state courts. Trump denies any wrongdoing in all cases. In Manhattan, Trump is under scrutiny for allegedly falsifying business records stemming from a $130,000 payment to adult film star Stormy Daniels.
Meanwhile, in Georgia and the District of Columbia, he faces charges of trying to overturn the results of the 2020 election.
Despite the turn of events on both political fronts, some are pushing back against Trump’s supposed pro-crypto agenda. Molly Jane Zuckerman, editorial editor at Blockworks, wrote a warning to single-issue voters, like cryptocurrency enthusiasts who are now carefully watching the former president’s support for the sector, and avoid being caught off guard by his most recent words.
Trump is ahead in several polls. ON Polymarket56% of traders bet that he will win the elections against Biden’s 37%, and so on Predict it, Trump is also leading the race. On opinion polls 538 websiteTrump is also ahead, albeit by a much narrower margin, with 41.3% of voters’ preferences versus Biden’s 39.9%.
Perhaps part of Trump’s advantage reflects the fact that cryptocurrency enthusiasts are willing to take the risk.