The Breakdown - Elon Musk Launches a Bitcoin-Friendly Political Party

Episode Date: July 9, 2025

Elon Musk just announced the formation of the "America Party," embracing Bitcoin and sparking political chaos. Meanwhile, Congress bets on explosive economic growth through massive spending, and House Republicans prioritize crypto legislation. Plus, the government drops its appeal in the landmark Tornado Cash sanctions case, but the criminal trial against its developer looms large. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

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, July 8th, and today we are talking about Elon Musk's Bitcoin Party. 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, welcome back to the show. Well, here we are 2025, and Elon Musk's new political party will support Bitcoin. Over the weekend, Elon took the next step in his political journey, announcing the formation of the America Party.

After a July 4th Twitter poll came back with two-thirds support, Musk posted, when it comes to bankrupting our country with waste and graft, we live in a one-party system, not a democracy. Today, the America Party is formed to give you back your freedom. Now, this is clearly a strong reaction to the so-called big beautiful bill, which must, had earlier referred to as a disgusting abomination. It's not clear how real the America Party will be as they're yet to file with the FEC. Still, as Elon says, the most entertaining outcome is the most likely, so it's worth taking the announcement at least a little bit seriously. President Trump is certainly treating this as a real thing that might happen. In response to the announcement he posted, I am sadden to watch Elon Musk go completely off the rails,

essentially becoming a train wreck over the past five weeks. He even wants to start a third political party despite the fact that they have never succeeded in the United States. The system seems not designed for them. The one thing third parties are good for is the creation of complete and total disruption and chaos. For Musk, meanwhile, it seems like that disruption and chaos is kind of the point. And that could be a way for his third party to succeed where many others have failed. Rather than contesting the White House, Musk wants to run candidates in a handful of key House and Senate seats. In foreign parliamentary systems, that's historically been the winning strategy for third parties. Rather than seizing power outright, they win enough seats to become

the tie-breaking vote. And so perhaps that's what a quote-unquote successful version of the America Party would look like. Meanwhile, an unsuccessful version could be similar to Ross Perrault in the 1990s, carving off just enough of the Republican vote to hand control over to the Democrats. Now, whether or not Musk follows through with this plan, the news is still a big indication of Bitcoin's place in the political discussion. Following the announcement, a random Twitter user asked Musk whether the America Party would embrace Bitcoin. He responded, Fiat is hopeless, so yes. Within a few short years, an understanding of fiat currency has gone from an academic concept to something that is increasingly ingrained in American culture, and an understanding of Bitcoin has gone hand-in-hand.

And even if Bitcoin ownership might still be relatively small, it is increasingly part of the cultural zeitgeist. By way of one small example, lyrics from the latest Drake song include the line, I look at this stuff like a BTC could be down this week, then I'm up next week. And so the question is what this leads to next. It's clear that fiscal spending isn't slowing down, and while we can quibble about how large the fiscal impulse actually is, the general understanding is that more than $3 trillion will be added to the deficit over the next decade as a result of this bill. The administration has abandoned the idea of budget discipline and are instead pursuing a strategy of growing out of the debt. The official projection from the White House Council of Economic Advisers

is that the BBB will add 2% to GDP growth next year and 5% by 2028. The Tax Foundation has a much more conservative projection, expecting a 1.2% bump by 2028. All other forecasters, including the Congressional Budget Office, are far lower. U.S. growth hasn't run above 5% on a consistent basis since the 1960s, with the entirely unsustainable guns and butter fiscal policy. However, that seems to be the strategy, run the economy hot to outrun the debt. House Speaker Mike Johnson has flagged that Moore is coming. Speaking with Fox News on Sunday, he teased two additional reconciliation bills to come, one in the fall and another next spring.

BED is explicitly that these will be massively pro-growth, with Johnson stating that the BBB will be, quote, jet fuel for the economy. The GOP agenda is geared towards getting these key economic policies in place ahead of the midterms. So even if Musk's political party plays spoiler, the die will already be cast. There's a growing sense among financial professionals that high growth and high inflation is what comes next, and the bets are being placed accordingly. Brett Johnson of Santiago Capital tweeted, have spoken to many smart people who know the system is screwed.

While they don't come out and say it, they're singularly focused on making as much as they can as quickly as they can in order to be prepared for what comes next. Not exactly retreating to Galtz Gulch, but kind of reminds me of that. And so that seems to be the political environment for the next 18 months. Congress betting it all on hypergrowth while Wall Street positions to take full advantage, and the highest profile billionaire in the world, abandoning the Dogecoin meme to embrace Bitcoin in this new political party. Today's episode of The Breakdown is brought to you exclusively by Grayscale.

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share of the future. Now, meanwhile, moving back to crypto policy more broadly, with the big beautiful bill out of the way, Congress is turning their attention back to the crypto agenda. House Speaker Johnson, alongside committee chairs French Hill and G.T. Thompson announced that next week will be a crypto week in the House. Johnson said in a statement, House Republicans are taking decisive steps to deliver the full scope of President Trump's digital assets and cryptocurrency agenda. The plan is to put three crypto bills to a floor vote. The House will vote on the Genius Act, the Senate's version of a stable coin bill.

If passed, the legislation will be ready for the president's signature. The second bill is the market structure bill known as the Clarity Act. That bill is fresh out of committee and we're yet to see the companion bill emerge in the Senate. However, a successful House vote would still keep the process moving. The final bill is the anti-CBDC surveillance state act, a relatively slim piece of legislation that bans the Fed from testing or issuing CBDCs. Majority Whip Tom Emmer said in the statement, By sending these three pieces of legislation to President Trump's desk,

we will protect Americans' right to financial privacy and deliver on our promise to make the United States the crypto capital of the world. A new day for American Excellence has finally arrived, and now it's time to get the job done. Critically, the GOP are coming to the crypto agenda as their next major priority. Floor time is scarce in Washington, so it's promising that this level of focus is being applied. The stable coin bill is likely to receive a rubber stamp or minor revisions and could easily be on the president's desk by the end of next week. The market structure bill could be a much larger topic of debate, as we're yet to see how much support it has beyond crypto-friendly Republicans. Crypto-Zar, David Sacks, said the goal.

was to have the Clarity Act moved on to the Senate. For their part, Crypto Advocacy Groups stand with crypto are throwing their full weight behind this version of the bill. They sent a letter to House members on Monday signed by over 65 crypto companies, which stated, we cannot afford to let inaction and uncertainty jeopardize our ability to secure America's economic future. Above all else, the U.S. crypto industry needs market structure, which ensures there are clear rules of the road and provides the regulatory clarity that developers, users, and advocates need to continue innovating. There has, of course, been a lot of debate among industry stakeholders about the details of the bill over the past six months. Veronica Irwin of Brogan Law recently wrote that, quote,

this disagreement among stakeholders is starting to smell toxic in Washington. And for that reason, the letter is important. It signals the industry is on board with this version of the law, even if it is imperfect. One Senate banking staffer told Irwin that the bill, quote, is not going to be an A plus, but if we can get it to a solid B, where there is a good test in some degree of clarity, and it's workable, then that's great. That seems to be the industry stance as well, that a workable bill that provides some degree of clarity is hugely preferable over not passing a bill at all. T.D. Cowan analysts, however, suggests that this isn't going to be an easy process. Although the Stablecoin bill passed in the Senate, it wasn't the low-hanging fruit many assumed it

would be. Only 18 Democrat senators voted for the bill, giving it a very slim margin. T.D. Cowan wrote in a Monday note, many of the hardest fights from the Stablecoin legislation were punted to the market structure bill. This creates risk as Democrats will push for restrictions on the Trump family's crypto endeavors. Republicans will have to find a way to keep Trump on board while giving Democrats at least some political cover. The House can force the Clarity Act through with zero buy-in from Democrats, but that's not the case in the Senate where a two-thirds majority is required, meaning that this bill could end up getting bogged down in the proxy fight over the President's Crypto Empire. Lastly, today, the U.S. government has abandoned their appeal of the tornado cash sanctions

lawsuit. Last November, a Florida federal appeals court ruled that the smart contracts were not the property of anyone and therefore didn't fit within the Treasury's power to apply sanctions. In March, the Treasury removed the sanctions and claimed this made the appeal moot. They were attempting to avoid a final order in the matter, which could have been relied upon to limit sanctions power in the future. The joint motion had an element of agree to disagree, stating, the government's view is that OFAC's rescission of the designation moots this appeal. Plaintiffs' view is that this appeal will become moot after the Texas judgment becomes final and unappealable. The Texas lawsuit was a second case on the same facts in a separate jurisdiction.

Plaintiffs, including Coin Center, had lost in federal court but won on appeal. The big takeaway is that the Treasury won't continue this fight and take either case to the Supreme Court. Peter Van Falkenberg, the executive director of Coin Center, tweeted, This is the official end of our court battle over the statutory authority behind the tornado cash sanctions. The government was not interested in moving forward and defending their dangerously overbroad interpretation of sanctions law. Now, although the sanctions lawsuits are over, the criminal prosecution of developer Roman Storm continues. The case is set to be heard in the Southern District of New York beginning next Monday. Storm is charged with

money laundering, operating an unlicensed money transmission business, and sanctions violations with a maximum sentence of 20 years in prison. Every indication suggests that DOJ will still run the full prosecution. None of the charges have been dropped and every expert witness has been met with objection. Storm claimed, they don't want the jury to hear about how tornado cash actually works or why what I built was legal. This is, of course, a big concern to many in the industry. While the administration has wound back much of the Biden-era war on crypto, the storm case could set a very dangerous precedent that crypto devs can be criminally liable for the actions of their users, even if their product is non-custodial and decentralized.

Indeed, Storm claimed, If I lose, Defi dies with me. We will keep an eye out on that case as it begins next week. For now, though, that is going to do it for today's breakdown. I appreciate you listening as always, and until next time, be safe and take care of each other. Peace.