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Trump and the politics of bitcoin
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Bitcoin is to its followers what the host is to Catholics: an article of faith. It also comes with a donation box. It’s a safe bet that Donald Trump’s recent conversion to bitcoin is motivated by the large donations that accompany it. Which puts his Democratic opponent Kamala Harris in a difficult position. Harris would like to protect retail investors from an asset class that often resembles a Ponzi scheme. But America has an army of cryptocurrency investors—about 40 million—that, in a close election, cannot be ignored.
In practice, most serious cryptocurrency investors will already be vote for trump. To Trump’s surprise, he discovered at a bitcoin conference last weekend that their bête noire was Gary Gensler, chairman of the Securities and Exchange Commission. Gensler believes cryptocurrencies should be regulated. “I didn’t know he was so unpopular,” Trump said after a long cheer. “Let me say it again, on day one, I will fire Gary Gensler.” It also came as a surprise to many Democrats, who had no idea that Gensler was a George Soros-type demon in the cryptocurrency world.
US Bitcoin Policy Trump’s choice is both electoral and substantive. The vote is the easiest to understand. Many have questioned Trump’s decision to choose Ohio senator J.D. Vance as his running mate. By conventional standards, Vance was a disastrous choice. His approval ratings are down. His ratings among most women voters are unsurprisingly low, given his disdain for those who choose not to have children or who are unable to.
But Vance is backed by some of the wealthiest people in the United States. Among them are Silicon Valley giants Elon Musk, Peter Thiel, Marc Andreessen and Ben Horowitz. Each of them is invested, both financially and philosophically, in cryptocurrency. As analysts scrutinize Vance’s investments, supposedly populist economy — his support for fighting trusts, for example, and his responsibility to Wall Street for the woes of the American working class — others follow the money. During his short career in the Senate, Vance sponsored legislation to deregulate cryptocurrencies. He calls Gensler “the worst person” to oversee the asset class.
This is precisely in line with Vance’s views. West Coast Sponsors. Thiel contributed $15 million to Vance’s Senate campaign. Musk promised, but has since questioned, the $45 million per month he promised Trump the day before Vance’s announcement. Andreessen and Horowitz have come out in support of Trump. Cryptocurrency donors to Trump’s campaign include Cameron Winklevoss, co-founder of the Gemini exchange, and Jesse Powell, co-founder of the Kraken exchange.
The name Kraken gives a hint of the underlying politics behind bitcoin. The mythical Norse sea monster is a symbol of populist rage against the right-wing American federal machine. Kraken will rise from the waters to save the American republic from decay. The coin of Kraken’s revenge is bitcoin. Much like the gold fans of old, cryptocurrency enthusiasts believe that “fiat money” (a currency issued by the government and not backed by a commodity like gold) is the root of all financial evil.
For Thiel and Musk, bitcoin is both a technological and political expression of their beliefs. Bitcoin exists only because of blockchain technology, a testament to the genius of West Coast innovation. Bitcoin is also a key weapon that allows them to realize their wildest political dreams. Both men see themselves as Gullivers bound 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 in its most nefarious form. Bitcoin is how they blow it up.
This is all gibberish to most voters. For Harris, the reasonable position She’s been showing a benevolent neutrality toward crypto investors without making deregulatory promises she’d regret if elected. If Franklin Roosevelt could win in 1940 without tipping his hat to the fight against fascism, Harris could surely manage the necessary ambiguity about cryptocurrency. She should be careful not to repeat that the Fed is likely to issue a digital unit of account. Bitcoin enthusiasts see CBDC—the central bank’s digital currency—as a deep-state surveillance tool.
If Harris and Trump ever debate—which is a big “if”—it would be surprising if Trump remembered the significance of CBDC. Since China’s central bank has launched a digital currency, the United States must preserve that option. If Trump were elected, deregulated bitcoin would get a meteoric rise. He has also pledged to import the roughly $13 billion in bitcoin confiscated by the government onto the Fed’s balance sheet. That would be a Trojan horse. Add the war on the dollar to the radical changes that a second Trump presidency would bring.