As Biden Withdraws, How Trump Uses Crypto Strategy to Win Votes

On July 22, 2024, U.S. President Biden announced he would not seek re-election in 2024, choosing to focus on completing his current term, which ends on January 20, 2025. In an open letter on social media, he stated, “Serving as your president has been the greatest honor of my life.

While I intended to run for re-election, I believe stepping down and focusing on my remaining duties is in the best interest of our party and nation. I fully support Vice President Kamala Harris as this year’s nominee.”

During Biden’s tenure, the U.S. government has taken a cautious approach to crypto regulation, emphasizing regulatory improvements. This cautious stance is linked to the previous bear market and the fallout from FTX’s collapse.

In March 2022, Biden signed an executive order on ensuring responsible innovation in digital assets, outlining the U.S. government’s crypto strategy and guiding federal agencies on potential regulatory changes. A comprehensive digital asset development framework was released in September 2022.

In March 2023, the U.S. “2023 Presidential Economic Report” concluded that crypto assets are “too risky to serve as payment tools or expand financial inclusion” and “appear to continue to pose risks to financial markets, investors, and consumers.” Subsequently, the SEC and CFTC launched stringent enforcement actions against crypto entities like Binance, Kraken, and Coinbase.

In 2024, the approval of a Bitcoin spot ETF gave the market hope for policy relaxation. However, in May, the Biden administration chose to veto a resolution that aimed to overturn the SEC’s crypto asset accounting standard SAB 121. This law prevented strictly regulated U.S. banks from extensively custodying digital assets, sparking strong opposition from crypto supporters.

Senator Cynthia Lummis, a pro-crypto industry advocate, stated, “President Joe Biden missed the opportunity to correct his stance on crypto assets by vetoing the controversial crypto accounting standards. I will not stand by and will continue to promote financial innovation.”

As the election approached, the Biden administration sought to soften its regulatory stance, including approving the listing of an Ethereum spot ETF, but failed to gain significant support from crypto voters. Meanwhile, Trump positioned himself as the “Crypto President,” continually showcasing his support for the crypto sector to win voters.

From Crypto Opponent to Criticizing Biden’s Crypto Policies

Early on, Trump was firmly against crypto assets. In 2019, he tweeted, “I am not a fan of Bitcoin and other cryptocurrencies; they are not money, their value is highly volatile and based on thin air. Unregulated crypto assets can facilitate illegal behavior, including drug trade and other illegal activity…” In 2021, he told Fox Business that Bitcoin was a scam against the dollar and wouldn’t be surprised if it fell below $6,000.

However, as this election cycle began, Trump gradually confirmed his pro-crypto stance, frequently criticizing Biden’s tough position alongside the Republican Party.

Trump once criticized Biden for not understanding cryptocurrencies and posted on his social media platform Truth Social, “I have a very positive and open attitude towards crypto companies and related emerging industries. America must lead this field, not be second. On the other hand, the worst president in American history, Joe Biden, wants this industry to die slowly and painfully. That will never happen under my watch!”

At the Libertarian National Convention, Trump promised to commute and release Ross Ulbricht, the creator of “Silk Road,” if re-elected. “If you vote for me, on my first day in office, I will convert Ross Ulbricht’s sentence to a limited term. He has served 11 years, and we will send him home.”

Additionally, he vowed to ensure the future of cryptocurrencies and Bitcoin happens in the U.S., not overseas; support the self-custody rights of America’s 50 million crypto holders; firmly oppose the creation of a central bank digital currency (CBDC), a policy heavily promoted by Democrats; stop Biden’s actions to destroy cryptocurrencies; and keep Bitcoin opponent Elizabeth Warren away from Bitcoin.

In June, Trump met with several Bitcoin mining representatives at Mar-a-Lago. According to CleanSpark Inc. Executive Chairman Matthew Schultz, Trump expressed his love and understanding of cryptocurrencies and added that Bitcoin miners help stabilize the power grid. He emphasized he would advocate for miners in the White House.

This “presidential roundtable on Bitcoin mining” included participants from Nasdaq-listed Bitcoin mining companies CleanSpark and Riot Platforms, as well as Marathon Digital and other notable industry players. Key figures included CleanSpark’s S. Matthew Schultz, Riot Platforms’ Jason Les and Brian Morgenstern, Marathon Digital’s CFO Salman Khan, and Amanda Fabiano from Fabiano Consulting (formerly of Galaxy and Fidelity).

This move directly contrasts Biden’s attitude towards crypto mining. The Biden administration’s 2025 fiscal year budget proposal pointed out the negative environmental impact of crypto mining, affecting environmental justice and raising energy prices for those sharing the grid with miners.

The proposal suggested a 30% tax on the total energy costs of crypto miners, applicable to both grid-supplied and self-generated electricity. The tax would be phased in, starting at 10% in 2025, 20% in 2026, and 30% in 2027. Biden previously proposed the same tax scheme last year, but it failed to pass both the House and Senate.

Courting Crypto Voters from Multiple Angles

To gain more votes and financial support from the crypto sector, Trump’s campaign team announced they would start accepting cryptocurrency donations, aiming to unite those “opposing the Biden administration’s control of American financial markets.”

According to The Wall Street Journal, Trump’s campaign raised $331 million in the second quarter, with about 1% in crypto donations, mostly in Bitcoin and Ethereum, worth approximately $3 million. Around 100 people donated cryptocurrencies to Trump’s campaign between May and June.

Data shows crypto industry donors have contributed $94 million to U.S. federal political committees since 2023, surpassing the $83 million donated in the previous election cycle. Most donations came from political action committees (PACs) that fund Trump’s campaigns.

Coinbase and Ripple Labs donated $20.5 million and $20 million, respectively. Marc Andreessen and Ben Horowitz each donated $9 million to Fairshake, while billionaire twins Cameron and Tyler Winklevoss each donated $2.5 million. Coinbase Global CEO Brian Armstrong donated $1 million.

In addition to accepting campaign donations, Trump plans to speak at the Bitcoin 2024 conference in Nashville at the end of July. According to CryptoSlate, sources reveal that Trump might make a landmark statement at the conference, planning to make Bitcoin a strategic reserve asset for the U.S.

Supporting Policies

The Republican Party’s 2024 election platform supports multiple pro-crypto policy measures, vowing to end the “illegal and un-American crackdown” on the U.S. crypto industry. Besides opposing the creation of a CBDC, the platform promises to “defend the right to mine Bitcoin” and allow crypto holders to self-custody their tokens, asserting, “We will defend the right to transact without government oversight and control.”

Trump also named Ohio Senator J.D. Vance as the Republican vice-presidential candidate. Vance, a former venture capitalist, has publicly supported cryptocurrencies and criticized the SEC’s regulatory approach. Last month, he drafted legislation to reform digital asset regulation. In last year’s annual report, he disclosed holding $100,000 to $250,000 worth of Bitcoin via Coinbase.

According to Coinbase CEO Brian Armstrong, he has met with over 10 Democratic and Republican senators in Washington, D.C., to discuss setting clear rules for the crypto industry and providing consumer protection for crypto users. He mentioned that with the “Financial Innovation and Technology for the 21st Century Act” (FIT21) passed in the House, there is “strong bipartisan momentum” in the Senate to complete this work. “It’s great to see the voice of crypto voters making an impact.”

Overall, Trump’s pro-crypto stance is profoundly influencing the crypto market and the U.S. election. However, this supportive stance also has complexities. In the context of the U.S. election, Trump’s pro-crypto position may attract support from some crypto enthusiasts and tech industry workers. However, given his changing stance on cryptocurrencies, the stability and execution of his policies remain uncertain, potentially causing market fluctuations and regulatory uncertainties.

Regardless, his stance has undoubtedly boosted his support rate. According to data compiled by polling firm Echelon Insights, 13% of those not planning to vote for Trump said his crypto position made them view him more favorably. Polls show that a majority of respondents (60%) believe Congress needs to regulate crypto businesses, while Republicans generally dislike the current financial system’s operation.

For the development of the crypto sector, this could be a positive. There currently seems to be no strong candidate to challenge Trump. For Bitcoin, this means a pro-crypto administration might enter the White House. Historically, new administrations often see the SEC chairman resign. Although current SEC Chairman Gary Gensler’s term runs until June 5, 2026, he may resign in January or February 2025.