The Breakdown - A Bipartisan Crypto Voting Coalition Emerges

Episode Date: March 5, 2025

Things might seem weird out there for crypto policy, but a bipartisan group is coming together to vote as a crypto block. NLW argues that beyond the hype and hoopla, things are moving in the right direction. Sponsored by: Ledger Ledger, the world leader in digital asset security, proudly sponsors The Breakdown podcast. Celebrating 10 years of protecting over 20% of the world’s crypto, Ledger ensures the security of your assets. For the best self-custody solution in the space, buy a LEDGER™ device and secure your crypto today. Buy now on Ledger.com. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Tuesday, March 4th, and today we are doing a grab bag, everything from day two reserve takes, to a bipartisan group coming together to fight for crypto policy, to the SEC dropping more lawsuits. Before we get into that, however, if you're enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, obviously the big discussion continues to be the strategic crypto reserve. And while there was much acrimony going around as you got from yesterday's episode,

it seemed at least that markets were enjoying the news. Alas, the rally was snuffed out just as quickly as it began. Monday saw Bitcoin retraced the entire move trading back down at 83,000. Solana is now trading below its weekend price level after pulling back by 20%. XRP has also fully round-tripped with CryptoQuant reporting record levels of selling from Ripple Wales. Cardano is holding up a little better but was also down over 25% on the day. And if you were thinking that this was just an exit pump for insiders, well, the price action lends a lot of credence to that idea.

Quinn Thompson, the CIO of Lucker Capital wrote, You guys sold the glaringly obvious low-liquidity weekend crypto scam exit pump into a bearish retest area, right? Quantian tweeted, Bitcoin has retraced the entire move since Sunday. Time to announce another strategic reserve, I guess. Paulo Macro commented, I don't think people fully appreciate the news failure today in crypto following the Trump and dump. It makes you wonder if Trump tweets about stocks will people buy or sell. Now, as far as actual policy goes,

the calls for the reserve to be Bitcoin only did nothing but increase. Tyler Winklevoss, the co-CEO of Gemini, wrote, I have nothing against XRP, Salana, or Cardano, but I do not think they are suitable for a strategic reserve. Only one digital asset in the world right now meets the bar, and that digital asset is Bitcoin. Many of these assets are listed for trading on Gemini and meet our rigorous listing policy criteria. But with respect to a strategic reserve, it's another standard. An asset needs to be hard money that is a proven store of value like gold.

Jeff Park, the head of Alpha Strategies at Bitwise, tweeted, Listen, I represent a premier crypto firm that manages the world's largest index fund, and I'm telling you that Bitcoin should be the only strategic reserve asset. What else do you need to know? others are starting to come around to the idea that the entire concept of a strategic reserve doesn't make a lot of sense. Marty Bent, the managing partner at 1031 ventures tweeted, The real Bitcoin strategic reserve in the U.S. sits in the wallets of individuals and businesses. If the Trump admin wants to win the Bitcoin race, the best way to do that is to unleash the private market.

Admit that Bitcoin is an emerging currency, eliminate the capital gains tax, enshrine the right to self-custody and private usage into law. If Trump does these three things, it won't matter how much Bitcoin the federal government holds. the American private market will ensure that the U.S. wins the Bitcoin race. Indeed, overall, they're starting to be a sense that this isn't the policy the industry was pushing for. Jake Chavinsky, the chief legal officer of Variant Fund, tweeted, crypto has always been libertarian at heart. Most of us working here never wanted government to buy our bags or give blockchain a regulatory moat. We just wanted to boot off our neck

so we could compete in the free market. Less strategic reserve, more protections for devs. The Monday research notes are a little mixed on what to expect moving forward. T.D. Cowan's political analysts suggested the entire announcement felt like amateur hour, writing, we caution against overreacting to the social media post. The original version did not even include Bitcoin and ether as part of the reserve. That suggests to us it was not coordinated and there was also no discussion of how the government would get the funds to buy tokens. The note discussed the need to get solid crypto policy through Congress rather than throwing Sunday headlines at the chart. Indeed, one of the big questions moving forward would be

whether Republicans could actually get the votes to pass a lasting Bitcoin Reserve through Congress. Standard Chartered was a lot more bullish on the situation, as is usual for that research shop. They noted that February was the worst month for Bitcoin since June of 2022, but that last weekend was the strongest since January 2021. Analysts wrote, That combination of the worst month in two and a half years, followed by the best weekend in four years, looks to me like the first solid data point of a Trump put for crypto,

similar to the Fed put for stocks. The Fed put, of course, refers to central bankers intervening in drawdowns using liquidity injections. Standard-chartered reiterated long-term targets, aiming for $200,000 by year end and $500,000 by the end of 2028, writing, We've moved from selling rallies to buying dips, and hence I refocus on my $500,000 Bitcoin Target.

The big concern out of all of this is that this does the exact opposite of legitimate the industry in the eyes of the world. Hammerfrog commented, Most of the world has always known the space to be a scam. Trump embracing it and leveraging it in the worst way possible has cemented it as such. Now, looking ahead, we have a packed schedule in Washington.

Today, the Senate was scheduled to vote on repealing the IRS broker rule. If passed, this will close the loop on the fight that began in 2021. when impossible reporting requirements for defy were inserted into the infrastructure bill. Perhaps more importantly, it will be the first time the new Congress goes to a vote and gives an opportunity for pro-Crypto Democrats to signal support for the industry. Tonight's State of the Union new dress could also feature crypto discussion for the first time. Then Friday's Crypto Summit will be the major event and likely give us a lot more information about where policy is going.

A series of summits have replaced the idea of a standing Crypto Council filled with industry figures. Washington Insiders report that a smaller guest list will be announced soon. Rumors are also swirling that Trump will announce zero capital gains taxed on U.S.-based crypto on Friday. Now, while that is dominating a lot of Twitter conversation right now, many are pointing out that tax changes require legislation passed by Congress and can't be done by presidential decree, so setting up yet another battle around crypto policy. Hello, friends, I am thrilled to share that Ledger is once again partnering and sponsoring with the breakdown.

Many of you know, but for those of you who don't, Ledger is the most secure hardware wallet for your crypto and logins. It's trusted by 7 million users and secures 20% of the world's digital assets. What's more, Ledger is a lot more than wallets. Over the recent years, they've built a comprehensive ecosystem of products and services, all of which are designed to make digital ownership more secure and accessible. You can buy your Bitcoin with Ledger and Ledger Live, and so much more. Basically, not only did they want to keep your assets secure, they want you to be able to do more with them. Ledger's newest devices, the Ledger Stacks and Ledger Flex, introduced the world's first secure touchscreens, making it easier and safer to manage your transactions and assets.

Alongside Ledger Stacks and Ledger Flex, the company also launched the Ledger Security Key app, offering a safer alternative to traditional passwords and enhancing your digital security. If you are in this space, you owe it to yourself to at least check out Ledger and their ecosystem what they have available to you. So thanks, once again, to Ledger for sponsoring the show. Good news, though, over in Congress, lawmakers are reaching across the aisle on Cryptop Policy. Congressman Richie Torres tweeted, excited to announce that today Tom Emmer and I are launching the Congressional Cryptococcus. We hope to build a unified bipartisan coalition to cement America's leadership in the future of digital assets and blockchain innovation.

Emmer amplified the announcement, adding, Millions of American voters made their voices heard at the ballot box in November. You elected the most pro-crypto Congress and presidential administration and history. To capitalize on this opportunity, Richie Torres and I have launched the Congressional Crypto Caucus. The Crypto Caucus will serve as a unified voting bloc in Congress, a nonpartisan group of members ready to mobilize to support and defend open, permissionless, and private innovation in the United States. As we have been seeing, Congress does have a packed schedule ahead of them when it comes to crypto policy. Several agency rules are in line to be repealed,

while Stablecoin and market structure legislation are firmly on the agenda. Ron Hammond, the Senior Director of Government Relations at the Blockchain Association, is reporting that the Stablecoin bill is rapidly moving forward. His information is that Senator Haggartie's bill will go to a banking committee vote within a few weeks. Hammond added that the House is likely to move a corresponding bill within a month or two. Senator Tim Scott had previously said he wants to get stable coins and market structure done by April, but that timeline is starting to feel a little tight. More generally, the Crypto-Coccus will be an interesting way to gauge support within the House. Unlike the blockchain caucus established in 2017, this is explicitly a voting block.

We don't know how deep membership will be at this stage, especially on the Democrat side of the House. But the group will function as a visible signaling device for lawmakers and a reminder that crypto reforms were a vote winner during the last election. Adding some bipartisanship back into the process is also a big deal after a divisive start to the administration. Crypto reforms were a bipartisan issue in November, so hopefully that's reflected in the actions of lawmakers. G. Kim, the president of the Crypto Council for Innovation, wrote, CCI very much appreciates the continued leadership of representatives Emeran Torres. The Congressional Crypto-Coccus will serve as a needed bipartisan coalition to help ensure U.S. leadership when it comes to digital asset and blockchain

innovation. It's critical that we have comprehensive legislative frameworks, which will stand the test of time to provide clear rules to allow for innovation while best protecting consumers and investors. Meanwhile, the unwind of the last administration continues at a rapid clip. Cracken announced that SEC staff agreed to drop their lawsuit with no admission of wrongdoing, no fine, and no alterations to Cracken's business model. Argent Sethi, the co-CEO of Cracken posted, the case is over. Fairness and Justice One. We can now continue to focus on innovation and growth. This is a huge moment for crypto, the U.S. and the world. A case that should have never existed in the first place is finally behind us.

The SEC's lawsuit, which mischaracterized our business from day one, was always without merit. This dismissal confirms what we've said all along. Regulation should be based on facts, not politics. It's hard to overstate the cost of all this. Years lost, millions spent, and untold stress for the team, who never backed down. Winning wasn't inevitable, but giving up was never an option. The Binance case is now the only outstanding lawsuit against an exchange, and reports suggest that's also heading for a settlement. Separately, the agency has dropped their investigation into NFT company Yuga Labs. The board apes creators wrote, After three plus years, the SEC has officially closed its investigation into Yuga Labs.

This is a huge win for NFTs and all creators pushing our ecosystem forward. NFTs are not securities. And yet, after seeing no reaction from the market, Adam Greenbaum commented, cool, are these things ever going to be valuable again? Commissioner Hester Purse has also announced the staff list for the Crypto Task Force. More than a dozen senior staff have been allocated to the task of forming new crypto policy at the agency. The most recognizable is Mike Selig, who has been appointed as chief counsel. Selig was previously a partner at Wilkie Far, and has been deeply engaged with crypto-legal discourse on Twitter for many years. In fact, you've probably heard his name on

the show quite a few times. Lastly, moving to markets for just a minute, and maybe I shouldn't say markets, but instead the long-term trajectory of this industry, going completely under the radar over a busy weekend for news, BlackRock added Bitcoin to their model portfolios last Wednesday. The firm's Bitcoin ETF was added in a waiting of 1 to 2% for portfolios that include an allocation to alternative assets. Model portfolios are provided to BlackRock's army of financial advisors, as well as being available for third-party advisors to copy. They give investment recommendations based on a customer's age and risk tolerance. For example, a high-risk model portfolio might suggest a 90% weighting to equities split across multiple domestic and international ETFs, with a 10% allocation

to corporate and sovereign bond ETFs. These set allocations allow for easy, rules-based rebalancing between quarters. BlackRock also offers dynamic strategies where investment managers might suggest overweight positions from time to time to fine-tune the portfolio according to current conditions. At the moment, their suggestion is 3% overweight equities, trimmed down from 4% earlier this year. Around 150 billion in assets are managed using BlackRock's model portfolios. With Bitcoin now added, investment advisors will be free to suggest and allocate their clients to the asset class. Eve Cout, the firm's head of portfolio design, said demand has been strong, adding,

they all want to allocate more to alternatives, but they need guidance on how to size, scale, and rebalance the position. Bloomberg-Zerak Balcunis commented, this is probably better for Bitcoin to be treated as a serious alt rather than a shiny object. In their portfolio update published last week, BlackRock laid out their rationale for investing in Bitcoin. They reiterated their view that Bitcoin can, quote, potentially serve as a novel store of value in global monetary alternative, hedge to U.S. dollar hegemony and political instability, and proxy play on the broader offline to online digital transition of goods and services.

supercharged by boomer to millennial demographic tailwinds. Hammering home, Bitcoin's defining feature of scarcity, they commented, if every millionaire in the U.S. asked their financial advisor to get them one Bitcoin, there wouldn't be enough. And there you have it, folks. Lots of chaos, lots of instability, but we are firmly pointed in the right direction.

And the things that we get to debate now are much better than the things we were debating just a few months ago. With that, we will wrap today's breakdown. Appreciate you listening, as always. And until next time, be safe and take care of each other. Peace.