Donald Trump's Crypto Advantage over Kamala Harris

 

The 2024 election may mark a pivotal moment for cryptocurrency in U.S. politics, with former President Donald Trump currently emerging as a frontrunner in this area. While crypto may not be the primary concern for voters deciding between Trump and Vice President Kamala Harris, a recent poll conducted by a digital currency firm in May revealed that 25% of voters in key swing states are considering candidates’ stances on the issue. Furthermore, about one in five Americans reportedly own Bitcoin or another form of cryptocurrency, according to industry research.

A major focus of the upcoming election is the regulation of the cryptocurrency sector. Many within the industry have criticized Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), accusing him of lacking transparency and effectiveness, and suggesting that he has been openly hostile to digital currencies under President Joe Biden’s administration.

In response, the Republican Party, led by Trump, has become the first major political party in the United States to incorporate a clear cryptocurrency policy into its platform. The platform asserts, "Republicans will end Democrats' unlawful and unAmerican Crypto crackdown and oppose the creation of a Central Bank Digital Currency." It also vows to defend the right to mine Bitcoin and ensures that all Americans retain the right to self-custody of their digital assets, free from government surveillance and control.

In contrast, the Democrats have yet to articulate a clear position on cryptocurrency. Notably, in 2021, Trump dismissed Bitcoin as a "scam," but he demonstrated a shift in attitude at a campaign rally in Racine, Wisconsin, in June, where he declared that the future of crypto "will be made in America." Additionally, he spoke at the annual Bitcoin conference in Nashville, Tennessee, in July, where he noted that his campaign had received over $25 million in donations from the crypto community by the end of July, including a single event that raised $25 million, as confirmed by David Bailey, the conference organizer and CEO of Bitcoin Magazine. Conversely, Harris declined an invitation to speak at the conference.

As of August 12, a source familiar with Trump’s fundraising efforts revealed that his campaign had secured $7.9 million in donations from the crypto sector since May. Brian Hughes, a senior advisor to the Trump campaign, stated to Newsweek, "Crypto innovators and others in the technology sector are under attack from Kamala Harris and the Democrats. While the Biden-Harris Administration stifles innovation with more regulation and higher taxes, President Trump is ready to encourage American leadership in this and other emerging technologies."

In response, a Harris campaign spokesperson refrained from commenting on her stance regarding cryptocurrency. Nevertheless, some Democrats and industry insiders believe that she could still leverage crypto as a political issue. While she has not publicly championed it, she has also refrained from opposing it and comes from California, a hub for the tech industry.

On July 26, just a day before Trump's address in Nashville, a group of 14 House Democrats, including Representatives Wiley Nickel (North Carolina), Josh Gottheimer (New Jersey), Ro Khanna (California), and Ritchie Torres (New York), sent a letter to the Democratic National Committee and Harris, advocating for "a forward-looking approach to digital assets and blockchain technology."

Nickel, who attended the Nashville conference, expressed concern that Democrats should not concede the crypto issue to Trump, stating, "Turning this issue into a political football is just exactly what Donald Trump is trying to do. It isn't serving my constituents or anyone in the industry." He emphasized the need for Democrats to highlight the substantial use cases and public policy benefits of embracing cryptocurrency as a party.

Eric Pulier, CEO of the digital company Vatom, remarked that ignoring cryptocurrency could have significant political repercussions for either candidate. "Democrats are now playing catch-up to try to make the case that, in fact, they’re not hostile. They are also pro-innovation," he noted.

Nickel was one of only 71 House Democrats who supported the Financial Innovation and Technology for the 21st Century Act (FIT21), a piece of legislation still awaiting Senate approval that received backing from 208 House Republicans, with only three opposing it. While he has engaged in behind-the-scenes discussions with the Harris campaign, he declined to share specifics.

Additionally, a group called Crypto4Harris is hosting a virtual town hall on August 14 featuring Mark Cuban and other venture capitalists. David Plouffe, a former advisor from the Barack Obama administration who served on the advisory board of the crypto exchange Binance, is now advising the Harris campaign on cryptocurrency and related matters, according to reports from Reuters and Politico.

Cuban mentioned to Decrypt that Harris's campaign reached out to him about cryptocurrency shortly after she became the presumptive Democratic nominee, which he viewed as a "good sign." 

A poll from May by Digital Currency Group (DCG) and The Harris Poll indicated that approximately 26% of 1,201 registered voters across states like Michigan, Ohio, Montana, Pennsylvania, Nevada, and Arizona are actively considering candidates’ positions on digital assets when making their voting decisions.

Kristin Smith, CEO of the Blockchain Association, reflected on the emerging influence of crypto voters, stating, "I think if you'd asked me a year ago if the crypto voter was a real thing, even I was skeptical. But I think what we're finding is that people have a distrust or dissatisfaction with traditional finance or big tech companies, even though it might not be fully realized today." She attributed Trump's strong crypto policy and the increasing interest among Senate and House candidates to this growing sentiment.

The Stand With Crypto Alliance, a nonprofit organization, evaluates politicians based on their positions regarding cryptocurrency and endorses those aligned with its views. Since its launch in August 2023, it has garnered over 1.32 million "advocates," potentially impacting key races, particularly in battleground states like Georgia and Arizona.

The Alliance grades senators, giving 38 Republicans an "A" and five a "B," while only six Democrats received "A" grades and one a "B." Many Democrats received lower grades due to their opposition to cryptocurrency.

Kara Calvert, head of U.S. policy for Coinbase, remarked that the growing attention on the cryptocurrency sector is becoming a significant factor in politics. "As we get closer and closer to the election, policymakers want to be reelected," she noted.

The relationship between the cryptocurrency industry and Gensler remains strained. The SEC has launched multiple lawsuits against Coinbase, alleging that it has acted as an unregistered broker and exchange. In response, Coinbase has sought to subpoena internal communications involving Gensler and the SEC regarding their regulatory decisions. The SEC has also taken action against other crypto firms.

"The biggest challenge that we've had as an industry has been Gary Gensler at the SEC," Smith stated. "Getting him out of there and replacing him with someone who is willing to engage constructively with the industry could lead to the most beneficial change."

Democrat Representative Nickel echoed this sentiment, suggesting that if Harris wins, Gensler should be replaced. "His approach of regulation by enforcement has not served the Biden-Harris administration well at all. He's actively hostile towards crypto, and that's absolutely not helping keep those jobs here in America," Nickel said.