The Breakdown - Kamala Harris' Latest Crypto Overture

Episode Date: October 16, 2024

Kamala Harris has included crypto in her appeal to win Black male voters. Some see it as a positive sign for crypto. Others just think the whole thing was weird. Is this a "here we go again" moment with the language of investor protection? Unlocking Bitcoin DeFi with ExSat The exSat Network aims to unlock and scale the Bitcoin ecosystem without compromising Bitcoins Ideology. The network has partnered with the largest mining pools in the world, major custodians and exchanges, Cefu, Cubolt, Matrixport, Copper, OKX and aims to have over $200M TVL at mainnet launch on the 23rd of October.  Follow exSat’s Twitter to stay up to date @exsatnetwork or visit the testnet exsat.network 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, October 15th, and today we are talking about Kamala Harris's latest crypto push. Before we get into that, however, if you are 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. Just a month out from the election, Kamala Harris is attempting to brush up her crypto credentials, and her campaign's latest comment on crypto policy comes in the context of a push to win black male voters.

On Monday, they released a new proposal called the Opportunity Agenda for Black Men. The policy is centered around $20,000 for giveable loans to black entrepreneurs. It also features a promise to legalize marijuana at the federal level, down payment assistance for black homeowners, and a health equity initiative targeted at Black men. For the crypto policy, the Harris campaign said that they would be, quote, supporting a regulatory framework for cryptocurrency and other digital assets, so black men who invest in and own these assets are protected. The platform announcement recognized that 20% of black Americans own or have owned cryptocurrency assets. Interestingly, this was the first time

the Harris campaign actually referred directly to cryptocurrency rather than using some other term like digital assets. The announcement stated, Vice President Harris appreciates the ways in which new technologies can broaden access to banking and financial services. She will make sure owners of and investors in digital assets benefit from a regulatory framework so that black men and others who participate in this market are protected. This framing of crypto policy has a lot of people surprised. Cleve Messador, the executive director of the Blockchain Foundation, spoke from her position as a black woman in crypto stating, it is perplexing that the Harris-Walt's policy team

opted not to meet with diverse leaders in crypto, but instead is rolling out a policy that narrowly frames crypto around black men only and proposes a regulatory framework limiting black men to consumers instead of producers. She had earlier pointed out that crypto has an incredibly broad investor base that can't be stereotyped in this way. Other crypto industry folks are confused by the framing around investor protection, given that Gensler's crackdown has been couched in the same language. Matt Hogan, the CIO of Bitwise, wrote, serious question. Is this statement the extent of the Harris pivot that people are excited about? Or did she say more in the live setting? These words are a Roarshack test, not a position. You can read them as aggressively pro-crypto or anti-crypto.

Another read is that this is simply the Harris campaign running the numbers on which voters they need to focus on. Justin Slaughter, VP of Regulatory Affairs at Paradigm tweeted, Crypto Ownership skews Black and Brown, male, and young. Our March poll found 33% of black registered voters had bought crypto. So if you're trying to find ways to improve soft numbers with black men, saying you'll help protect their crypto assets as smart. Oman Melcon, an adjunct professor at Columbia Business School, thinks that this isn't a pivot, but rather a continuation of the Democrats' patronizing approach to crypto. He tweeted, the latest Harris crypto proposal included in a list of economic proposals for black men isn't what people think it is.

There was an idea circulating around democratic circles during the post-FTX bear market that crypto is a form of predatory inclusion. This was a response to the claim many, including me, have made for years that crypto will lead to a more inclusive financial system. This incredibly cynical position was pushed by major think tanks like Brookings and was repeated by senior SEC staff not that long ago. I was interviewed by news outlets about it. The whole thing made me sad because the underlying assumption was that the overrepresentation

of young people in various minorities in owning or using crypto could only result from their naivete. Those of us who engage with young people and minorities on a regular basis know the opposite is true. Bitcoin and ether are the rare asset that were available to them and outperformed. They also appreciate the fact that the crypto industry, unlike almost any other, is a true meritocracy. Anyway, if you read the text of the Harris proposal closely, you'll see that it ends with protection. Given the lack of constructive engagement elsewhere, I assume they want to regulate crypto as something to be avoided, not something to be embraced. Others are simply happy to see any positive or seemingly, or at least spinnably positive statement out of Harris.

Lee Drogan, the CIO of Star Killer Capital, wrote, There are a bunch of my friends who are now morally, emotionally, and reputationalally pot committed to their I'm a single-issue crypto-trump voter schick. I frankly don't care how Harris gets to the right view on crypto, even if it's in a very obtuse way like this. Good is good. Frankly, my best guess is that Harris was looking for a way to jettison the Warrenite Finrag strategy without metaphorically slapping her in the face, and while this is an

obtuse and strange way to do it, it's hard for Warren to complain about it publicly, so well done. But then just for you to get a read on how this is playing outside of crypto, Tyler Austin Harper contributing writer at The Atlantic tweeted, genuinely floored that there are people who sincerely believe that Harris is doing this crypto stuff because it's an issue that matters to black men rather than because she's been in thick with crypto ghoul since this summer. Now, I'm not defending one thing or another,

but if you need to understand why the Democrats have worked themselves into a rough position when it comes to crypto, it's because, frankly, through a lot of their own actions and rhetoric, a big flank of their party feels exactly like that. In other words, that there is absolutely nothing wrong with characterizing an entire industry's participants as ghouls, and who somehow think that Harris, who basically no one in crypto actually believes, is anything more than tacitly more open to than her predecessor, is somehow in thick with us. Beyond Harper, there's a ton of comments that question whether crypto is genuinely as big of an issue to minority voters as industry-sponsored polling makes it out to be. Now, to take the Harris campaign

statement on face value, this policy came as a result of a listening tour of black communities. So then, was the listening tour a farce, with the Harris campaign cynically grasping onto any polling that gives them a pathway with black men? Or is it that actually talking to black communities paints a different picture of crypto than listening to opinion writers? That again, an account called Quantian had another theory tweeting, many people are very upset to learn today that black men aged 18 to 35 who own cryptocurrency is a more electorally relevant demographic than they are. When people said the election would be decided by 100,000 low engagement dumbasses across seven states, what exactly did you think that meant? Vibes? Papers? Essays?

The policy announcement was made in the lead-up to a rally in Erie, Pennsylvania. The Crypto for Harris account was extremely enthusiastic head of the rally, tweeting, Harris explicitly announces support for crypto just weeks before the election. Her proposed policies aren't just pandering talking points, like a legally impossible claim to fire Gary Gensler or keeping millions of seized Bitcoin that may belong to victims. She's offering real policy proposals that will turn the ship towards crypto regulatory clarity. So what actually transpired?

Matthew Sigel, the head of digital assets research at Van Eck, summarized the speech that was ultimately delivered, tweeting, Harris's speech in Erie was 20 minutes long, half about Trump, and didn't mention crypto. Anyways, this is yet another interesting plot twist in the Crypto-2020-Saga. I will say from my point even trying to assume good faith as much as humanly possible, the language does feel eerily reminiscent to the sort of investor protection language we've had in the past. But what it all amounts to, I still don't think anybody actually knows. This episode of The Breakdown is brought to you by XAT Network.

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or transparency. The X-Sat Network aims to unlock and scale the Bitcoin ecosystem without compromising Bitcoin ideology. Check out X-SAT.network or follow X-SAT on Twitter at X-Sat Network. That's X-S-A-T-N-E-T-W-R-K, and unlock Bitcoin Defi with X-Sat. Now, speaking of these issues, the folks at Galaxy Digital have published their policy scorecard for Biden-Harrison Trump. Head of research, Alex Thorpe, Dorn gave the simple one-line summary. While Trump is undoubtedly more favorable for the industry, we're optimistic that Harris can be more supportive than Biden has been. Trump's position doesn't really need much further explanation. While on the campaign trail, he has promised

to strategic Bitcoin stockpile and policies that would make the U.S. the, quote, crypto capital of the world. For the Harris campaign, Galaxy leaned on behind-the-scenes conversation that, quote, suggests Harris is targeting a slightly more constructive approach than Biden. However, they noted that Harris's tax policy could be extremely hostile to the industry. Her stated plans include rolling back the Trump tax cuts, which would result in higher capital gains taxes. Proposals to tax unrealized gains seem to have quieted down over the past month, but that idea is still in the zeitgeist. The scorecard was largely designed as a way to predict the market reaction, with Thorne adding, based on the analysis, we view downside risk of a Harris victory

as limited with explosive upside possible in the case of a Trump victory. With little on the regulatory agenda, Bitcoin should fare well regardless of outcome. Altcoins face risk from Harris and could see outperformance with Trump. Nick Carter commented on the report stating, so insanely pro-crypto he went too far and became a D-Gen himself and we had to ask him to dial it back a bit. Harris has said very little. Personally, I don't think greeting the tea leaves has value. She would be business as usual, aka continued crackdown. Speaking of Trump going full D-Gen, this morning was the token launch for World Liberty Financial, the Trump family defy project. The token sale was conducted under SEC exemptions,

which limits participation to accredited investors in the U.S. and local limitations in other jurisdictions. During a Twitter space is on Monday, the team said that they had whitelisted over 100,000 U.S. investors. The project aims to raise $300 million from the token sale, which would value the project at $1.5 billion. The tokens are non-transferable for the first 12 months and will function purely as governance tokens. During the Twitter spaces, the team emphasized that governance decisions will be kept in line with U.S. regulations. Now, it's not clear exactly how they interpret the current state of law around Defi, but the reference at least suggests the team is concerned about enforcement actions. There was no word on when the borrowing platform would go live, but it seems

like investors aren't particularly worried about that part. Some Bitcoiners were dismayed that Trump is leaning into defy. Pleditor tweeted, World Liberty Fi says Donald Trump's vision of crypto is not Bitcoin at stablecoins. Dylan LeClair, however, had some constructive advice, tweeting, if you want to make millions, you can run an all-coin affinity scam. If you want to make billions, you can put Trump media on a public market Bitcoin standard. Then again, others just think the entire story is crazy. NFT collector Gift tweeted, regardless of what you think about World Liberty Financial, personally not going near it, the fact that U.S. president and current nominee is launching a defy platform weeks before the election is absolutely nuts.

Curious to see if and how it changes U.S. political norms going forward. Now, finally, if you're tired of election coverage and think that none of it matters for Bitcoin, well, you are in good company. During the Black Rock earnings call, CEO Larry Fink said, I'm not sure if either presidential candidate would make a difference. I do believe the utilization of digital assets are going to become more and more of a reality worldwide. Fink referenced conversations he's been having with global asset managers.

He said, We believe Bitcoin is an asset class in itself. It is an alternative to other commodities like gold. Ethereum, he believes, stands to benefit from adoption of crypto more generally. Overall, Fink's thesis for adoption was, if we can create more acceptability, more transparency, more analytics related to these assets, than it will be expanded. But I truly don't believe it's a function of regulation, more regulation or less regulation. I think it's a function of liquidity and transparency. Fing compared digital assets to the early days of the mortgage market or the high-yield market,

both of which started off very slow. He claimed that BlackRock helped normalize those markets by building better analytics and data. Despite a fairly notable catastrophe in 2008, mortgage markets are now an $11 trillion asset class. The discussion leaned on the idea that blockchains could be additive to AI-powered analytics, providing much better data than investors are used to. Fink said, I truly believe we will see a broadening of the market of these digital assets. Aside from philosophical points about the growth of digital assets, the earnings call also highlighted how critical the success of the Bitcoin ETFs has been for BlackRock. The world's largest asset manager is now even larger, hitting 11.5 trillion in total assets for the first time. Bitcoin ETFs contributed

a relatively modest $23 billion to that total, but they were still large enough to be a major focus of the call. Fink said, we will continue to pioneer new products to make investing easier and more affordable. Investor Maya Zahavi noted that Vink is back from the summer doldrums, tweeting, Larry Fink's remarks are a statement not about Bitcoin but crypto as an asset class in itself that is growing on top of other chains, and as a conduit with AI for a different financial infrastructure. First time I recall a major financial institution up in crypto in a while. Interesting, though, that he chose to emphasize AI and analytics. Makes one wonder what kind of products BlackRock sees in crypto other than ETFs, especially for asset management. Investor Mike Alfred

took this as further confirmation of something that he believes. He tweeted, You've heard me say it for months, but now Larry Fink is saying it too, so maybe you'll listen. It doesn't matter who wins this election. Bitcoin is going to rip. That's going to do it for today's breakdown. Appreciate you listening as always. And until next time, be safe and take care of each other. Peace.