Donald Trump has once again made history as a presidential candidate: he could become the first major party candidate to attract support from cryptocurrency traders, which has unsettled some members of the Democratic Party.
On Wednesday, Trump told cryptocurrency supporters at his estate in Mar-a-Lago that they should “vote for him” because the Biden administration has been cracking down on the industry.
“They (the Biden administration) are against it,” he said during an event promoting his own non-fungible token (NFT).
Trump’s public show of support for cryptocurrency enthusiasts marks a significant shift from the criticisms he made during his first term, but it is not surprising. In recent years, the Republican Party has become increasingly friendly towards Bitcoin and other digital assets, while key Democrats remain divided on whether to grant legitimacy to the industry in the wake of a series of scandals. Trump’s direct support for cryptocurrency companies is a milestone moment for them, as these companies have spent millions of dollars lobbying in Washington to influence the 2024 election.
Kristin Smith, CEO of the Blockchain Association, a top cryptocurrency lobbying group, said, “President Trump’s comments mark a significant shift in the importance of digital assets in this election cycle.”
This issue provides Trump with a new line of attack against Biden. Gary Gensler, the chairman of the Securities and Exchange Commission (SEC) nominated by Biden, has taken extensive enforcement actions against cryptocurrency companies, claiming that these companies have violated federal securities laws. The White House threatened to veto legislation proposed by bipartisan lawmakers on Wednesday that would overturn the SEC’s disliked guidance for the cryptocurrency industry, angering cryptocurrency supporters.
“Gensler is very much against it,” Trump said of the government’s attitude towards cryptocurrency on Wednesday. “Democrats are very much against it.”
However, not all Democrats are against it. On Wednesday, twenty-one Democrats ignored Biden’s veto threat and voted in favor of a resolution overturning the SEC’s cryptocurrency guidance, joining the Republicans. Trump’s embrace may introduce new partisan colors into the debate over cryptocurrency regulation, which is a risk for the industry as it seeks support from both sides.
After Trump’s comments, Wiley Nickel, a Democratic representative from North Carolina who supports cryptocurrency, wrote on Twitter that his party “cannot hand this issue over to the Republicans.” However, key Democrats like Elizabeth Warren of Massachusetts have hindered industry-friendly policies while warning of the risks to consumers and the financial system, as well as the role of cryptocurrency in financial crimes.
Nevertheless, it is unclear whether the support of cryptocurrency traders can win a significant number of votes. A survey conducted by the Pew Research Center last year found that the majority of Americans have little confidence in the security or reliability of cryptocurrency. The industry has suffered significant blows in recent years, including the collapse of the FTX exchange due to a massive fraud scandal and the US government reaching a $4.4 billion settlement with the Binance exchange over allegations of facilitating financial crimes.
A survey released this week by a cryptocurrency industry group found that over 20% of voters in six key swing states consider cryptocurrency an important issue. Another nationwide survey commissioned by cryptocurrency firm Paradigm found higher rates of cryptocurrency ownership among communities of color and younger demographics, key voters who helped Biden win in 2020 but now pose a challenge to him.
Cryptocurrency has gained support from right-wing politicians who hail it as an alternative to the mainstream financial system. An earlier survey by Paradigm found that cryptocurrency holders lean towards Trump rather than Biden, with 48% to 39%, while 13% have yet to decide.
Bernie Moreno, a Republican Senate candidate from Ohio, has long been a supporter of cryptocurrency. He said, “President Trump understands freedom and liberation, he knows that American innovation needs to be protected, and he knows the role that government should play is to ensure that we create an environment conducive to innovative growth and prosperity.” “That’s why it’s not surprising to see him make these comments about cryptocurrency.”
Vivek Ramaswamy, a former Republican presidential candidate, is seen as a potential cabinet official in Trump’s second term and has supported cryptocurrency during the Republican primaries, helping to push the former president to oppose government-backed central bank digital currencies. Cryptocurrency companies also oppose potential Fed digital currencies, with conservatives warning that they pose a threat to privacy.
Ramaswamy said in an interview last month, “President Trump’s ability to delve into newer areas of interest to him left a deep impression on me.”
Ramaswamy declined to comment on whether he wants to be involved in cryptocurrency policy in Trump’s second term, saying he is “focused on winning elections.”
Trump’s support for digital assets has not been consistent. During his term, he mocked cryptocurrency on social media, and his cabinet members were skeptical of the industry. Trump’s SEC chairman launched a major lawsuit against a well-known cryptocurrency company.
However, Trump continued to be involved in the cryptocurrency space after leaving office. He has issued his own NFT and as of August last year, he has $2.8 million in cryptocurrencies in his wallet.
Trump’s embrace of cryptocurrency also brings potential risks. The digital asset market has experienced dramatic booms and busts in recent years, and major industry participants like Sam Bankman-Fried have been imprisoned for illegal activities.
This shift also brings risks to cryptocurrency lobbying groups in Washington. Trump could make the politics of digital asset regulation even more polarized. The industry has spent years and millions of dollars in campaign donations trying to win support from both sides, which may be crucial to enacting the legislation that cryptocurrency companies desire.
“I don’t want this to become a partisan issue,” said Cody Carbone, Chief Policy Officer of the Chamber of Digital Commerce, a cryptocurrency advocacy organization. “I think it provides an opportunity for Democrats to really think and understand the benefits of digital assets.”
