The Breakdown - Presidential Candidate Ron DeSantis Pledges to Protect Bitcoin

Episode Date: May 25, 2023

Florida Governor Ron DeSantis announced his presidential campaign formally last night on a Twitter spaces with Elon Musk. During the conversation he discussed Bitcoin, including why he thinks it's important and why he'll protect it as president. On today's episode, NLW looks at Bitcoin's history with presidents and presidential candidates.  Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribeto 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 Thursday, May 25th, and today we have something of an unexpected and interesting update. 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. Well, yesterday, one of the major anticipated candidates for the presidential election in the United States for the upcoming year had their campaign kickoff event and during it pledged to protect Bitcoin as part of their campaign. What's more, this is not the only presidential candidate to reference

Bitcoin. Now, this represents a fairly significant change and evolution from the past. I think it is an important waymarker in the mainstreaming of Bitcoin, and so today we're going to talk about Bitcoin and Presidents. We start our story in 2020. On July 15th, former President Obama tweeted about Bitcoin for the first time. He wrote, I'm giving back to my community due to COVID-19. All Bitcoin sent to my address below will be sent back doubled. If you send 1,000, I will send back 2,000. Only doing this for the next 30 minutes, enjoy. Now, obviously I'm kidding, and this was part of a major Twitter hack where 130 high-profile accounts, including Jeff Bezos, Kim Kardashian, Apple, Kanye, and more sent out similar messages trying to get Bitcoin. All in all, the scam

netted the attackers about 100,000 in Bitcoin, but alas, they would not remain free for long to enjoy it. A year later, a 22-year-old British man named Joseph O'Connor was arrested in Spain for the attack, and three other people have also been charged, including then 17-year-old Florida resident Graham Ivan, who was the mastermind of the attack, and who was the mastermind of the attack, sentenced to three years in prison after pleading guilty. Now, the actual first time a president tweeted about Bitcoin you'll remember was a year earlier in July of 2019. On July 12th of that year, then President Donald Trump wrote, I am not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is highly volatile and based on thin air. Unregulated crypto assets can

facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook Libra's virtual currency will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulation, just like other banks, both national and international. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the world, and it will always stay that way. It is called the United States dollar. Now, the context for this little tirade was right there in the middle tweet, Facebook's Libra.

This was right around the time that Facebook had announced that they wanted to get into the virtual currency game, and while this seems like it's far away now, there were a number of things about Facebook's initial Libra proposal that were extremely scary to U.S. government officials. One was the fact that it came from Facebook. Facebook was in hot water for a number of reasons on both sides of the aisle. Republicans thought that Facebook was censoring them, and Democrats were convinced that Facebook had allowed Russian bots to twist the election in favor of Donald Trump over Hillary Clinton. So the idea that Zuckerberg, who was at an all-time low in terms of DC's opinion of him, would waltz in and create a competitor to the U.S. dollar was pretty much a non-starter

for many, many politicians. Two things made that even worse. One was that Facebook was not planning to center Libra in the United States. They were setting up the organization that would run the currency out of Switzerland, leading many members of Congress to ask why not here. Now, the final and biggest insult was that Libra was not a U.S. dollar-backed stable coin. It instead had its value pegged to a basket of currencies of which the U.S. dollar made up about half. In many ways, this harkened back to John Maynard Keene's original proposal for a bankor. After World War II at the Bretton Woods conference, Keynes thought it would be a good idea to have a global reserve currency that was not the province of any one nation or state. He called this the bankor, which is also the inspiration

for the crypto company of the same name. Now, of course, that proposal lost out in favor of the U.S. doing pretty much whatever it wanted after it had won the war. Seventy-five years on, the U.S. still seemed pretty not keen on the idea of some sort of free-floating SDR-type instrument. Now, particularly antagonistic towards Facebook's plan was then Treasury Secretary Stephen Mnuchin. Mnuchin was an outspoken critic of Bitcoin, cryptocurrencies, and other things in the space, and part of his opposition was seen to have been his connections to the banking industry. Mnuchin had led a consortium of investors to buy the beleaguered IndyMac after the global financial crisis and ultimately rebranded it as One West.

One West has, of course, been embroiled in scandals and lawsuits around its foreclosure policies. Trump's tweet about crypto, Libra, and Bitcoin was widely seen to, who have been, at the very least, inspired by Stephen Mnuchin, if not actually even written by him directly. A few days after the Trump tweet, Mnuchin announced an aggressive stance against Libra as well as Bitcoin, using the power of financial regulators to, quote, combat risks posed by cryptocurrencies. What's more, in the dying days of the lame duck Trump presidency, Mnuchin attempted to ram through legislation that would have forced identification requirements on self-hosted wallets. The risk was acute enough that representatives Warren Davidson,

Tom Emmer, Ted Bud, and Scott Perry all sent an open letter to Mnuchin in December of 2020, asking him not to push forward the rumored rules. They said that the potential regulation would, quote, hinder American leadership, precluding U.S. actors from participating in the space, and, quote, undermine the Treasury Department from stopping illicit actors from exploiting the financial system. They also said that requiring exchanges to maintain this much KYC data could threaten user privacy, and Davidson went even further, saying,

Before Treasury issues midnight rules on the regulation of self-hosted wallets, Secretary Mnuchin should come to the people's house and speak to representatives about what his regulations would do. Over-regulating self-hosted wallets will crush a nascent industry and leave the United States behind the rest of the world when it comes to harnessing the power of blockchain and cryptocurrency. Those rules ultimately did not go through. Now, that wouldn't be the end of Trump's interaction with crypto. He might not have liked Bitcoin or Libra, but he sure liked NFTs, or at least the money they could make him. Trump has now issued two editions of digital trading cards. Like everything he does, they were controversial. Upon the release of the first set, some pointed out that they seemed to be direct rip-offs of stock photos, but that didn't stop them from selling out. In April of this year,

former President Trump wrote on his truth social platform, I'm pleased to inform you that due to the great success of my previously launched digital trading cards, we're doing it again, series two, available right now. Approximately six hours later, Trump said that all of his 47,000 digital trading cards had sold out, totaling $4.6 million. The floor price for those cards is currently 0.14 eth, and the total collection volume all time on OpenC is a little over 14,000, ETH. Next on our presidential list, let's talk Biden. The way I might sum up the feeling, especially for Democrats and progressive bitcoinsons, is continuously growing disappointment.

Many were elated when Gary Gensler was tapped to be SEC chair, seeing in him an ally, or at least someone who actually understood the industry. After all, he had taught classes at MIT about crypto and Bitcoin, right? Well, we all know how that story has ended, with Gensler being the biggest antagonist in the entire administration. Then there was last year's executive order. It was widely considered a measured, moderate, and well-considered peace. It didn't have any sort of weird rulemaking. It just asked for study. It gave the appearance that while having specific concerns, the administration was open to this entire new movement. Now, obviously that has now changed. After FTX at the end of last year in

the beginning of this year, it feels as though the moderate voices in the Biden administration got out of the way of the aggressive anti-crypto wing. This has led to all of the actions and pressure that has pushed crypto out of the banking system that many have called Operation Chokepoint 2.0. However, over the last few weeks, the White House has actually gotten more directly aggressive with crypto. They announced the cryptocurrency dame tax, which would be a 30% excise tax on crypto mining, which would effectively ban the industry in the United States. And then even more, crypto has somehow found its way into the rhetoric around the debt negotiations. A few weeks ago, Biden tweeted a graphic that suggested that Republicans,

Republicans were prioritizing rich crypto traders and tax loopholes in the negotiations, and then at the G7 meeting recently Biden said that he wouldn't sign any deal that protected wealthy crypto traders. Basically, somewhere, some person decided that it was good politics to go after the crypto bros as part of this debt negotiation fight. So here we are. Important to note, though, not every Democrat is content with Biden as their choice for president. One dark horse challenger is Robert F. Kennedy Jr. This month, he gave a keynote speech at the Bitcoin Conference in Miami. It was his first public appearance since announcing his candidacy at a rally in Boston the previous month, and it was a full-throated endorsement for Bitcoin and the freedom technology it represents.

In that speech, he said, we live in a time that technology has dangerously expanded the capacity for governments and corporations to control our lives. Distant impersonal multinationals and authoritarian technologies have usurped realms of human activity that were once private or held by the community. Kennedy said that, just like many others, his orange pill moment was last February's Canadian trucker protest, where surveillance tech and monetary control combined in a chilling attempt to squash legitimate protest. When I witnessed this cataclysm, he said, this devastating use of government repression, I realized for the first time how free money is as important to freedom

as free expression. A government that has the power to starve its citizens when they're disobedient will inevitably turn our entire country into serfs. Referring to pandemic policies, Kennedy said, the government established a new precedent. If it has a good enough excuse, the government can now take away all of our freedoms. And guess what? There's always a good excuse. Now, at the core of Kennedy's campaign, and really the through line in all of his positions, is pushing back on the growing power of governments and corporations over the freedoms of individuals. However, when it came to his Bitcoin policies, he got specific. He spoke out against President Biden's proposed 30% tax on Bitcoin mining, on the grounds that it would require invasive surveillance of energy use, opening the door to

much more Orwellian policy in the future. It sets a terrible precedent, he said, in which everything that you do that requires electricity must be now monitored by the government. Kennedy positioned Bitcoin is a valuable tool against a broader trend of creeping government encroachment into the freedoms and privacy of citizens. Bitcoin is a bulwark against precisely this kind of government and corporate expansion and intrusion. He said, I will defend the rights of self-custody of Bitcoin and other digital assets. You should be able to own your own private keys the same as you own the keys to your car or your wallet. I don't think the government has the right to demand access to your Bitcoin key or indeed any of your passwords. To say otherwise is to cede essential territory to the surveillance state.

He went on. KYC requirements should be applied at the level of banks and exchanges, not at the level of nodes. Otherwise, it would become impossible to run the software. The whole point of Bitcoin is that it's decentralized. Anyone can run a node, and it's important not only for Bitcoin, but for a democracy to be decentralized. Now, Kennedy didn't say he wanted no regulation for the space. He said, events like the FTX calamity prove that some kind of regulation of the crypto industry is needed. My administration will consult with knowledgeable people like yourselves to establish sensible jurisdiction and governance. For starters, we must recognize that Bitcoin is not a security and should not be regulated as such. Bitcoin is in a class by itself.

He concluded, Bitcoin is both an exercise and a guarantee of those freedoms. Bitcoin is a major generator of the kind of innovation our country now needs. Bitcoin embodies two of my highest ideals, transparency and trust. have come to distrust the government, including the way that it has manipulated our money supply to benefit the very rich and prosecute endless wars, Bitcoin is a neutral currency beyond the ability of government or indeed any authority to manipulate. We are now living in this age of turnkey totalitarianism, with this emerging technology which can empower totalitarian regimes. Our job is to try to build and fortify democratic institutions at the same rate as that totalitarian instruments are being

expanded. Now, as powerful as these words are, Kennedy's campaign remains a dark horse. He's currently polling at around 16% in the Democratic primaries when unannounced candidates are not offered as an option. Biden is currently registering 62% in the polls. Now, the Democratic primary could be quite difficult for an upstart candidate. The Democratic Party are currently toying with the idea of not holding debates, claiming there is no serious opponent despite Kennedy polling at levels which would have qualified a candidate to appear on the debate stage in other election cycles. Traditionally, an incumbent president has typically been run unopposed by their party, However, there isn't a historical example with an 80-year-old incumbent.

Still the big news, and the news that prompted this episode came yesterday. Florida Governor Ron DeSantis has officially launched his presidential campaign. He did so in a Twitter Spaces conversation on Wednesday night, hosted by Elon Musk and V.C. David Sacks. The hour-long Q&A session strained overloaded servers and was plagued by the usual Twitter Spaces issues, but was one of the more unique campaign launches in recent memory. DeSantis completely rejected mainstream media coverage to unveil his campaign directly to the people on social media. DeSantis walked through his platform, touching on all the hot-button issues for Republican voters, including immigration, public health,

gender, and more. Among his positions, DeSantis spoke about the need for a digital bill of rights to protect freedom of speech on the internet, but most interestingly for our industry, DeSantis took a firm stance on Bitcoin and crypto in light of the ongoing regulatory crackdown. As governor of Florida, DeSantis has been dabbling, let's call it, in crypto policy over the last two years. The city of Miami has, of course, hosted an influx of industry builders and public figures, and in March of last year, DeSantis said he would look into allowing businesses to pay state taxes in crypto. More recently, he's hit out against the idea of central bank digital currencies, proposing a bill to ban them in his state. Wednesday's position, however, was more focused on

Bitcoin than the broader crypto industry. And the message was clear. In DeSantis' view, Bitcoin usage is a line in the sand issue for the operation of a free society. He said, you've got every right to do Bitcoin. The only reason these people in Washington don't like it is because they don't control it. They're central planners and they want to have control over society. So Bitcoin represents a threat to them and so they're trying to regulate it out of existence. Look, could Congress enact a statute to ban things like Bitcoin under the Constitution? They may be able to do. I would oppose that. I think people should be able to do Bitcoin, but Congress has never addressed this in this fashion and for the bureaucracy to just do it on their own

and make it so that people cannot operate in that space. That's what we mean when we say we've got to return the government to the people. As president, I'll protect the ability to do things like Bitcoin. I think these are people that are sophisticated. They can make decisions. There's risks involved with it, but let them do that. I don't have an itch to have control over everything that people may be doing in this space, and I think that the current regime, clearly they have it out for Bitcoin. And if it continues for another four years, they'll probably end up killing it. So I argue that this is a watershed moment. And the reason that I wanted to give you so much context in history is that we're talking now four years after that first mentioned by a president of Bitcoin,

where Trump was basically just using it as a cudgel to get to the point that he didn't like Facebook's Libra. Now we have easily the most significant contender to go up against Donald Trump in the Republican Party, saying that Bitcoin and things like it are major issues for him. Now to watch mainstream media, they have written off DeSantis entirely. For a while, polls had him even with Donald Trump, but now he's polling at around 20% compared to President Trump's 54%. The reality, though, is that the election is still something like 18 months away. DeSantis is the only non-Trump candidate to register.

more than 5%. He's also the second youngest candidate in the field at 44 years old, compared to Trump's 76. In a country that is extremely hungry to move past the current gerontocracy, don't be surprised if DeSantis holds a little bit more appeal to people than the media is currently giving him credit for. Either way, even if his campaign ultimately goes nowhere, the fact that Bitcoin was significant enough to warrant mention in this campaign launch event is quite telling. That's it for today's breakdown. I appreciate you guys listening as always, and until tomorrow, be safe and take care of each other. Peace.