Will the US build up strategic Bitcoin reserves? The industry is hoping that the Republican presidential candidate will make an announcement this weekend.
The bet is on: Will presidential candidate Donald Trump announce that the USA would create a strategic Bitcoin reserve if he were elected? On Polymarket, the largest betting platform, a third of participants consider such an unusual promise to be likely.
Trump has discovered his love for cryptocurrencies in recent months – although it is not entirely clear whether this really reflects his beliefs or whether it is purely an election tactic. Trump, not exactly known for a moral lifestyle or religious beliefs, is also a master at wooing conservative Christians.
In any case, on Saturday evening after the editorial deadline, Trump was scheduled to be the keynote speaker at the influential Bitcoin Conference in Nashville. Big announcements are a tradition there. For example, Nayib Bukele, the flamboyant president of El Salvador, declared Bitcoin legal tender in his country three years ago – albeit only in a recorded video message.
J. D. Vance ist Bitcoin-Investor
The industry is certainly reacting enthusiastically to Trump’s public commitment to their cause. And the Republican presidential candidate recently scored further points with crypto fans by appointing J. D. Vance as the possible next Vice President of the USA. The former venture capital investor Vance owns Bitcoin worth almost $1 million. This is known because as a member of the Senate he is subject to corresponding disclosure requirements.
The crypto industry’s almost unconditional support for Trump goes beyond lip service: it is raising a lot of money for the Republican candidate. Among the supporters of his campaign are, for example, the Winklevoss brothers – who played a role in the founding of Facebook and then launched the crypto exchange Gemini. They alone donated $2 million to Trump – in Bitcoin, of course.
Jesse Powell, the head of Kraken, another relevant trading platform, also spent considerable funds on the Republican candidate – in the cryptocurrency Ether.
Capital-rich lobby group
That’s just the tip of the iceberg. A lobby group called Fairshake PAC is also raising money for “candidates who are committed to making the United States home to innovators building the next generation of the Internet.” The next generation of the Internet is blockchain.
According to the Federal Election Commission, Fairshake PAC has already mobilized $203 million. The industry not only has very deep pockets, but also a growing broad impact. Investing in cryptocurrencies has apparently become a national sport in the USA, where there is a deep-rooted tradition of saving in stocks. The industry association Digital Chamber puts the number of investors in Bitcoin and Co. at over 50 million.
Support for Trump from the crypto industry has become so one-sided and extreme that the well-known Ethereum co-founder and honorary doctor of the University of Basel, Vitalik Buterin, called for reason in a blog post.
It is not a good idea to support politicians just because they support crypto, says Buterin. As always, the math genius expresses himself in a very differentiated way, but between the lines you can read a deep rejection of Trump’s ideas. Buterin is an internationalist.
But why are the supporters of Bitcoin and Co. unanimously supporting the Republicans? Ben Horowitz, co-founder of the well-known venture capital firm Andreessen Horowitz, puts it this way: The Biden administration is “basically undermining the rule of law to attack the crypto industry.”
A red rag
In particular, the influential Democratic Senator Elizabeth Warren and “her ally” Gary Gensler, head of the Securities and Exchange Commission (SEC), are a red flag for the industry. Both are extremely skeptical about cryptocurrencies. Companies in the industry have so far been pushing in vain for the US to issue clear rules that they could follow.
Of course, the Democrats cannot be blamed for the lawmakers’ refusal to act, but the crypto skepticism of people like Warren and Gensler creates the impression that the Biden administration is solely to blame for the malaise.
What is certain is that the companies have to operate in a legal grey area, while Gary Gensler’s SEC is bombarding them with lawsuits. This year, the SEC approved exchange-traded investment funds for Bitcoin and, more recently, Ether for the first time – but did so reluctantly and only after a court order.
How does Kamala Harris position herself?
It is possible that Democratic presidential candidate Kamala Harris can get rid of the image problem in an industry with growing influence. At least she would be knocking on open doors at the Digital Chamber. The industry organization called on Harris in an open letter on Monday to “pursue a forward-looking approach to digital assets and blockchain technology.”
The public has been left with the impression that the Democratic Party has a negative stance on digital assets. “We believe this past hostility does not reflect the progressive and inclusive values of your party.”
Trump has only recently declared his support for Bitcoin. In 2021, he described the best-known cryptocurrency as a “fraud.” Today, he already knows how to link the topic to his USA-first maxim. He now represents a view that crypto purists like Ethereum crack Vitalik Buterin find rather absurd: Bitcoin should be “made” in the USA. “If we don’t do it, China will take it over – or someone else, but most likely China. China is very interested in it,” Trump said recently in an interview with the Bloomberg news agency.
USA is more restrictive than Europe
But of course, public blockchains are decentralized by definition and are beyond the control of individual actors or countries. It is this independence that makes them credible. This is most likely to be the case when those who make their computing power available to Bitcoin or another network are based in as many parts of the world as possible.
Regardless of whether you support cryptocurrencies or not, no observer would deny that the USA is restrictive. Even Europe seems comparatively progressive. A legal framework has been implemented on the old continent that gives the industry legal certainty.
Switzerland, Singapore and the United Arab Emirates are even further ahead. And even the Chinese outpost of Hong Kong is actively trying to win the industry’s favor. Compared to the great appetite for risk that the Americans show in other technologies, such as investments in AI, this self-imposed lag seems somewhat surreal.
Will the Republicans fix it now? At least that is what David Bailey, the organizer of the Bitcoin Conference, believes. He has tried in vain to get Kamala Harris to attend in recent days. “All eyes are now on Trump,” he writes on X.
Another explanation
The well-known investor and businessman Mark Cuban also recently commented on the same platform. He has an alternative and rather worrying explanation for the crypto industry’s enthusiasm for Trump. It is a Bitcoin play. “Not because the former president is a much stronger supporter of cryptocurrencies. That’s nice. But it doesn’t really affect the price of cryptocurrencies,” writes the billionaire.
“What is driving the price of Bitcoin are lower tax rates and tariffs, which will be . . . inflationary.” Combine that with the global uncertainty about the geopolitical role of the US and the dollar as a reserve currency, which Trump will stoke, and “the stars could not be better aligned for a Bitcoin price acceleration.”
Cuban therefore believes that the foreseeable chaos that a second Donald Trump administration will cause, in his view, will increase Bitcoin’s appeal as a haven of stability.