Will crypto ownership and the divide over regulating digital assets be the deciding factor for the 2024 presidential candidates?
Crypto has become an important pawn in the upcoming November election that could just play kingmaker, or kingslayer, in the race to decide the next president of the United States.
That’s the message decoded by crypto pundits after former president Donald Trump, the Republican nominee frontrunner for 2024, essentially weaponized crypto last week, adding it to both his campaign’s arsenal and coffers.
Trump strongly endorsed the US crypto sector during his NFT event at Mar-o-Lago, and rallied against Joe Biden and the SEC’s stifling regulation of the nascent space, which runs in stark contrast to its adoption by other jurisdictions around the globe.
In the crypto space, it’s been the Year of Memecoins thus far and Solana-based PolitiFi coins like MAGA ($328m market cap) Jeo Boden ($170m), Doland Tremp ($50m), Lurry Pink, Elizabeth Whoren and hundreds of TrumpWIFHat variants have been racking up billions of dollars in trading value, foreshadowing the election chaos we can expect later this year.
Trump claimed that he’s “good with crypto,” and “made NFTs hot again,” even trying to "FUD" his rival’s unofficial memecoin, Jeo Boden (BODEN), saying he didn’t like it and calling it overpriced.
Trump delivered a crystal clear message: “If you like crypto in any form—it comes in a lot of different forms—if you’re in favor of crypto, you’d better vote for Trump.”
Trump’s “he’s one of us” anointing by crypto holders caused tech titan Mark Cuban to warn that Biden’s crypto animosity could cost him the election, while highlighting the growing influence of crypto amongst young voters.
Meanwhile, Democrat representative Wiley Nickel pleaded on X that the Dems “cannot hand this issue to the Republicans.”
Uniswap founder Hayden Adams, a new SEC target, compared Biden’s indifference towards crypto with Hillary Clinton’s 2016 campaign strategy, and believes that he’s ignoring a key issue for Americans that may see him hand in the keys to the White House.
Meanwhile, former Democrat and now independent candidate Robert F. Kennedy (RFK) has been polled by the New York Times to have as much as 18% of the under-30 vote in crucial battle states thanks to the power of TikTok, also a target of US regulations. RFK could seriously erode Biden’s voting base, largely on the topic of crypto alone.
All of the above do not BODEN well for Biden. How will US politics impact crypto markets?
Let’s take a closer look!
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The Great Democrat-Republican Crypto Divide
First, it’s important for non-Americans to understand the US political spectrum. Here are some very broad strokes:
- Democrat politicians are inherently more in favor of increased crypto regulation to better protect consumers and financial markets from scams, manipulation, and money laundering. And with good reason: Pew Research Center Survey found that 75% of respondents didn’t think crypto was safe or reliable to use.
- Republicans usually take a more hands-off, almost invisible hand approach to financial markets, doing what they think is best for the economy, which in turn helps its citizens get jobs and better income. They believe that stiff regulation does more harm than good. It impedes technological innovation, a hallmark of US global leadership and progress since the end of World War II.
American crypto owners, as a rule, lean towards the Republican values of having little to no government interference, and they value their right to financial privacy very highly. They feel that the traditional financial system is controlled by central banks.
Former CoinMarketCap Content Lead Molly Zuckerman posits in her latest Blockworks piece that crypto is now very much a partisan issue in the US that only a fool would vote on alone. Yet hardliners believe that if you want to save the US crypto industry, you need to vote for crypto, and that means voting Republican. It shouldn’t be that black and white.
Zuckerman further argues that politicians on both sides of the political divide are quite disingenuous with their timely new love for crypto, and are simply chasing votes. They can’t be counted on to deliver on their promises, and their position on crypto shouldn’t be the deciding factor in voting.
Growing Influence of Crypto This Election
In election years, there’s no margin for error, and candidates usually walk a tightrope all year trying to keep all potential voters happy. Biden appears to not only have forgotten that 20% of Americans (that’s 60 million people) own crypto — but seems to be actively trying to antagonize them.
In addition to the crypto mining tax, the White House last week threatened to veto a bipartisan House bill that would roll back some harmful SEC crypto custody guidelines. In defiance, 21 Democrats voted with the Republicans despite Biden’s warning.
The rollback targets the SEC’s Staff Accounting Bulletin 121 (SAB 121), which requires banks to handle crypto assets they custody on behalf of their customers as if they were the banks’ own assets and keep 5% of the amount in added reserve capital, although they can’t even put their customers’ digital assets to work. As a result, crypto custody is not worth the squeeze for US financial institutions.
SAB121 was controversially pushed through as a guidance, not a formal rule, and therefore skipped a review process and public comments.
Simply put, Biden is playing with fire when he disregards the crypto vote and inadvertently drives down the market’s prices. Here’s why:
According to a recent DCG Harris poll:
- 1 in 5 voters in six key swing states consider crypto to be an important election issue.
- Crypto-positive voters are more likely to be male, younger, and Black or Hispanic.
A Paradigm poll in March 2024 backs this up, finding that:
- Ownership of crypto is even higher among the youth and communities of color
- 20% have previously bought cryptocurrencies
- 2 in 5 men aged 18-54 and 1 in 4 US college students own or have bought crypto
- 33% of African Americans and Hispanics now own, have traded, or used cryptocurrency in 2024, versus 20% from last year.
- Nearly 70% of people polled are dissatisfied with the current financial system and 45% feel that it favors elites over regular folks.
- 161 million Americans are registered to vote, of which 11 million own over $1000 in crypto assets.
- 48% of crypto owners support Trump versus 39% for Biden, with 13% undecided
Crypto Under the House of Biden
When Biden took office in January 2020, the crypto industry’s hopes were at an all-time high. Expectations were high that his newly appointed SEC chairman Gary Gensler, a former MIT professor with a deep understanding of blockchain technology, succeeding Jay Clayton (who has since also flipped in favor of crypto), would shepherd the burgeoning new industry with careful guidance and support.
However, hopes were soon dashed, with Mr Gensler and sidekicks like Elizabeth Warren waging a war against cryptocurrencies, ramping up their efforts after FTX’s dramatic collapse in 2022. It took last year’s BlackRock Bitcoin ETF application for them to ease off a little bit, but it seems they’re back at it again in 2024.
Under Gensler’s leadership, the SEC is currently tied up in litigation (or planning it) against major firms for crypto-related securities “transgressions.”
Ironically, Biden helped revive the crypto market after Bitcoin dropped to under $4,000 during the Covid pandemic, partially sparking the wild 2021 bull run with his massive $1.9 trillion stimulus packages, which millions of investors injected straight into the crypto and equities market.
Since then, his party’s attitude towards crypto appeared downright antagonistic at times, culminating in the controversial Operation Choke Point 2.0, which cut off banking services to much of the crypto sector in 2022. This year, as if the Bitcoin halving wasn’t painful enough for them, we might see a catastrophic 30% tax on crypto miners’ total energy expenditure.
But it’s not all bad.
Let’s take a moment though to reflect in gratitude on Gensler’s deciding vote that saw the Bitcoin spot ETF finally get approved. Also, there’s that bit about Gary saying Bitcoin’s not security (but also not a commodity), unlike everything else.
Is Biden Really Anti-Crypto?
So what’s the reason behind all this crypto hate from Biden? A new Unchained article believes that Biden is risking the election in order to stave off crypto’s threat to the United States’ global banking hegemony.
Most global transactions pass through the US banking system at some point, and this has allowed its government to wield the dollar’s power as it sees fit. Its censorship of Russian financial assets following the recent international conflict has strengthened the resolve of BRICS partners to create alternative payment channels free of US intervention.
Crypto infrastructure makes such payments and trades more viable each year, helping to remove the need for any transaction to route through the US, even if their assets such as stablecoins are pegged to the US Dollar and collateralized with it.
American crypto folks aren’t buying this. At last year’s Bitcoin 2023 Miami conference, the resentment towards POTUS and the Dems were utterly palpable, with speakers and attendees mocking the president and lambasting the government’s fiscal debt and crypto crackdown — which saw many of the country’s most promising, young digital asset firms and talents seek greener pastures in cities like Dubai, Hong Kong and Singapore. They’ve had enough.
Candidates on both sides such as RFK, Tulsi Gabbard and Vivek Ramashamy all preached to the Bitcoin choir that crypto was good, had a forever home in the US, and that they would protect it if given the chance. Of course, odds were slim to none that they would be given that chance, and a year later, it’s very much a two-horse race yet again: Trump vs Biden II.
However, this time, the crypto vote matters — and Trump knows it.
Trump's Crypto U-Turn
Donald Trump has made a remarkable u-turn in his views on Bitcoin and crypto over the last five years.
As recently as 2021, Trump said Bitcoin felt like a scam, and during his presidency in 2019, he stated that he wasn’t a fan of cryptocurrencies and that their value was “based on thin air.”
Then, he launched his NFT collection in December 2022, which sold out in under a day. After a 7-figure payday, he likely had his eureka moment.
While Trump has been in politics for less than a decade, he’s been an astute businessman all his life, with a finger on the pulse of his customers — and he knows a golden opportunity when it presents itself.
The Democrats’ crypto war in the US has gifted him a disgruntled audience of mostly young and tech-savvy US voters, who may very well vote with their crypto wallets and at a minimum help support his campaign.
Trump's Pumping Our Crypto Bags?
Fast forward to 2024, and suddenly he’s being heralded as crypto’s latest white knight, being ushered into a pantheon seat right next to BlackRock's Larry Fink and Michael Saylor, here to protect our bags from the clutches of those evil US politicians.
According to blockchain sleuths Arkham, Trump is now the celebrity with the most crypto holdings (sorry Tom Brady!), HODLing a bag of around $6 million, the lion’s share of which is unsurprisingly the MAGA token.
During his talk this week, Trump also invited crypto opinion leaders like Messari’s Ryan Selkis and Polygon founder Mihailo Bjelic to address the audience.
Importantly, Trump now has Ramaswamy, a wealthy tech businessman and vocal Bitcoin proponent, firmly in his corner after he dropped out of the primaries. Vivek is supporting Trump in court this week, and with their bromance blossoming, there is increasing speculation that he may be Trump’s vice president pick.
Final Thoughts
Trump’s crypto courtship, whether he wins or not, is viewed as bullish for the industry, which could be due for a revival in any case by November as the supply shock effect of the halving starts to come into play, and those long-awaited interest rate cuts finally materialize. Nothing in this article is financial advice.
Crypto is now firmly positioned as a political hot potato, and the influence it grants to Trump and Robert F. Kennedy Jr., who have successfully appealed to the TikTok generation and attracted a significant number of young Latino voters, poses a threat to important Democratic demographics that Biden and the Democrats can no longer ignore.
2024 could just be the year that the crypto sector's influence becomes so significant, incorporating targeted outreach to crypto supporters becomes a crucial component of any future political campaign, not just in the United States.
Only time will tell if the Biden’s administration continues with its pursuit of crypto regulations, and whether US voters see that as enough of a reason to vote for Trump, abstain from voting, or make a cross on RFK.
The SAB21 vote now moves to the Senate, and, according to Mike Novogratz, provides a new “litmus test” for Democrats to pivot towards more favorable crypto regulation.
While we probably won’t see a Biden NFT collection, expect a temporary ceasefire from the Democrats as we near November, which in turn should help fan the crypto wildfire expected for later this year. Of course, if Trump fails to secure the Republican nomination due to his legal battles, all bets are off.
So sit tight in the meantime and cast your vote where it truly matters before the big show starts!
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