Trump Hitches Campaign to Crypto Crowd --- The former bitcoin skeptic draws fervent support from niche, rich constituency

 

"Donald Trump this week embraced a niche constituency that few would have expected him to champion -- the deep-pocketed investors who have made cryptocurrencies their domain.

The former president and onetime bitcoin skeptic on Monday helped launch a new crypto business with his family. On Wednesday, he bought burgers for denizens of a bitcoin-theme dive bar in New York. Pledges to block a Federal Reserve-backed digital currency and establish a "strategic national bitcoin stockpile" stand out in stump speeches that mostly focus on center-of-the-plate issues.

"This is an industry full of voters who are getting wealthier and more influential, and now there's someone who wants to be a voice for them," said Dennis Porter, chief executive officer of Satoshi Action Fund, a bitcoin-backing nonprofit. "They're going to give him votes, and they're going to give him money."

While the votes remains to be seen, the money has already proven helpful.

Marc Andreessen and Ben Horowitz, co-founders of the venture investor Andreessen Horowitz, said on a podcast in July that they were supporting Trump, crediting him with personally rewriting the party platform into a "flat-out, blanket endorsement of the entire space." Cameron and Tyler Winklevoss, the billionaire founders of the crypto exchange Gemini, said they are backing Trump because he is "pro-bitcoin, pro-crypto and pro-business." They gave his campaign $1 million each in crypto -- partially refunded because they exceeded federal campaign-contribution limits. Jesse Powell, a co-founder of the crypto exchange Kraken, said he donated $1 million to Trump's campaign and a pro-Trump super PAC, mostly in ether tokens, according to his post on X and Federal Election Commission filings.

The crypto industry's network of nonpartisan super political-action committees has amassed a nearly $170 million war chest to spend in the 2024 election cycle. Trump's campaign has raised millions of dollars in contributions made in cryptocurrencies, too.

Just two years ago, cryptocurrencies and companies blew up, creating a cascading effect that pulled prices lower yet. Everyday traders saw investments wiped out, and the Justice Department charged several former industry leaders with fraud, sending some to prison. This year, bitcoin's price has climbed back to near record highs.

This broader spigot has focused so far on congressional races, with crypto companies constituting nearly half of all corporate contributions to nonpartisan PACs, according to Public Citizen, a nonprofit consumer advocacy group.

The crypto industry's courting of Trump was on full display at a June fundraising dinner in San Francisco. In attendance were representatives from some of crypto's largest U.S. businesses such as the exchange Coinbase and the payments platform Ripple.

Trevor Traina -- ambassador to Austria during the Trump administration and now a crypto entrepreneur -- stressed that many large crypto companies are based outside the U.S. because of perceived hostility from the government. He asked whether the U.S. wanted to miss out. Trump said that would be terrible.

The talk quickly turned to a shared dislike of Securities and Exchange Commission Chair Gary Gensler.

"We all sort of agreed that Gensler is like in that movie 'A Quiet Place,'" said Traina. "If you make a sound, he sues."

That month, Trump also hosted about a dozen executives from the bitcoin-mining industry -- which uses computers to generate random numbers in the hopes of unlocking fresh bitcoin -- at his Mar-a-Lago resort. Over sodas and macadamia cookies, Trump asked them about the energy needs of bitcoin mining and told them his campaign would develop friendly talking points about the industry.

"He actually made the statement that he would like nothing more than to see all of the remaining bitcoin mined in the U.S.," said Matthew Schultz, executive chairman of bitcoin miner CleanSpark, who attended the event.

Trump appointed Howard Lutnick, chairman and CEO of Cantor Fitzgerald, co-chair of his transition team, giving the crypto industry's biggest cheerleader on Wall Street a potentially powerful role. Before Lutnick's appointment, both men addressed a July bitcoin conference in Nashville, Tenn.

"The rules will be written by people who love your industry, not hate your industry," Trump said in his speech.

Cantor now owns "a shedload of bitcoin," Lutnick told the audience, and announced that the company was opening a $2 billion facility to lend against bitcoin collateral.

Lutnick also has tied Cantor to Tether, one of the largest and most profitable companies in crypto. Its main product is the world's most-used stablecoin, also called tether, which essentially functions as an unregulated digital dollar with $119 billion in circulation. Cantor manages Tether's portfolio of U.S. Treasurys.

Trump's crypto-related promises often have direct effects on these backers. A national bitcoin stockpile would legitimize bitcoin as a reserve asset. His promise to block a Fed-issued digital currency would potentially keep out a powerful competitor to Tether.

Some investors and analysts view Trump's candidacy as being generally positive for crypto prices more broadly. His habit of making comments that seem aimed at rattling the status quo is widely regarded on Wall Street as being likely to lead to greater volatility in all asset classes -- an environment that has been good for bitcoin in the past.

At the conference, Trump also reiterated a pledge to commute the sentence of Ross Ulbricht, who created and ran the crypto-fueled Silk Road online drug marketplace before being sentenced to life imprisonment on federal drug and computer crime charges.

But Trump's most popular crypto-wooing pledge is his promise to remove Gensler from atop the SEC.

In their podcast, recorded before Trump's pledge, Andreessen and Horowitz complained that Gensler has refused to meet with them on several occasions, despite their firm's being among the biggest investors in cryptocurrency. Powell's Kraken has been locked in legal combat with the regulator.

"The U.S. securities laws have worked to protect investors for 90 years, and there's nothing incompatible about the crypto field with these time-tested laws," a spokeswoman for the SEC said.

Trump's pledge to fire Gensler on his first day in office was met with thunderous applause and loud cheers at the bitcoin conference.

Trump's tendency to entwine his business interests and political career also has taken a crypto turn. His latest crypto business venture, World Liberty Financial, launched with much fanfare Monday evening, through a two-hour livestream featuring Trump and his family on Elon Musk's X platform.

The project, which said it wants to "make crypto and America great by driving the mass adoption of stablecoins and decentralized finance," has shared few details about its mechanics so far." [1]

The general idea is very American and very Republican - to reduce the influence of bureaucrats on finance, to simplify and improve the financial system. Cool Trump.

1. U.S. News: Trump Hitches Campaign to Crypto Crowd --- The former bitcoin skeptic draws fervent support from niche, rich constituency. Foldy, Ben; Vicky Ge Huang; Ostroff, Caitlin.  Wall Street Journal, Eastern edition; New York, N.Y.. 21 Sep 2024: A.4.