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How the world turns. It was just over three years ago that former U.S. President Donald J. Trump called Bitcoin a scam and a threat to the U.S. dollar’s position as the world reserve currency. As president, Trump had strongly criticized cryptocurrencies as “not money, and whose value is highly volatile and based on thin air.”
Flash forward to July 2024, and GOP presidential nominee Trump has reversed his position and come to fully endorsed both Bitcoin and the digital assets industry writ large. Trump now acknowledges government deficits, run away debt, and resulting inflation, not Bitcoin, as the real threats to the U.S. dollar and future American financial prosperity. In other words, the problem is “Washington D.C., not crypto.”
Speaking at a crypto conference over this past weekend, Trump acknowledged that Bitcoin had grown from nothing more than an idea to the world’s ninth largest—and best performing—asset class in just a few years, and must be taken seriously. Among other things, Trump promised to make the United States the world’s “Bitcoin super-power” and to create the equivalent of a strategic national reserve of Bitcoin assets. Trump promised that the U.S. would never issue a Central Bank Digital Currency (CBDC) and vowed to stop development of CBDC programs. In the near term, Trump vowed to end the Biden administration’s “war on crypto” waged against the digital assets industry. Trump would in turn welcome back the entrepreneurs and innovative companies that have fled (or chased away from) the U.S. in recent years under the Biden administration.
Having observed four years of the weaponization of the U.S. regulatory system, especially including the Securities and Exchange Commission’s practice of “regulation by enforcement,” under Chair Gary Gensler, crypto industry participants have finally and fully turned against the Biden administration. With an estimated over 50 million crypto users in the U.S., this is material. As I wrote earlier this year, potential crypto voters tend to skew younger, be less politically involved, and less likely to affiliate with political parties. Winning this voting block may swing November elections at all levels of government.
Recognizing the potential danger, some elements within the Democratic Party are sounding the alarm bells. Calling out the error of the Biden administration’s war on crypto, seventeen congressional Democrats recently wrote a letter to the Democratic National Committee urgently urging the party to change course. Specifically, they called on the DNC’s platform to engage with industry experts and develop “pro-digital asset language in the party’s platform.” Their recommendation is to select a Democratic party vice-presidential running mate for Kamala Harris who is sophisticated in crypto policy, and, in a rebuke to SEC Chair Gensler, “select a pro-innovation SEC chair.” The congressmen, noting that that key constituents of the Democratic party are adopting digital assets, warned, “over 20% of voters in key battleground states identified crypto as a major issue in the 2024 election.”
It is not clear than the mainstream of the Democratic leadership is on board with heeding the warning and changing direction, and parts of the progressive wing, led by Senator Elizabeth Warren, are outright hostile. But even if the Harris campaign and the DNC suddenly embrace crypto, it is probably too little too late. As Tyler Winklevoss, the co-founder of cryptocurrency exchange Gemini, recently put it, “The Biden-Harris Administration has four years of terror to unwind and only 101 days before November to do it.”
Trump has evolved his position for both political and strategic reasons. Yes, he recognizes the power of the crypto vote, and wants to capture it. But he also acknowledges the power of the blockchain and related digital asset technologies to transform broken financial, monetary, and political systems through greater transparency, inclusion, and fairness, not to mention inflation resistance. The U.S. has the potential to be a preeminent leader in the most disruptive emerging technologies of the century, including in both digital assets and artificial intelligence. If the U.S. doesn’t lead here, other countries, likely including our geopolitical adversaries, will gain the upper hand.
Developing and implementing a constructive policy framework for digital assets that embraces innovation and entrepreneurship, while providing adequate consumer protections, is vitally important for U.S. competitiveness and economic growth. In the 1990s, U.S. policymakers managed, by and large, to create policies that resulted in the United States becoming the leader in the emerging technologies of the era that came to represent the vast majority of productivity improvements and national wealth creation of the past three decades. Let us not now squander the opportunity before us to lead the next technological—and monetary—revolution.