The Breakdown - Trump Completes His Crypto 180

Episode Date: May 10, 2024

Former President Trump held an event at Mar-a-lago for Trump NFT holders that served as a coming out party for his courting the crypto vote. NLW explores the Democrats self-inflicted wound -- along with why some Congressional Dems are still fighting. Today's Show Brought To You By Ledger - 5% to Bitcoin Developers When You Buy https://shop.ledger.com/pages/bitcoin-hardware-wallet 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 Thursday, May 9th, and today we are talking about Trump's Crypto-180. 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. All right, friends. Well, before we get into the meat of today's episode, let's just listen to this clip

of former and potentially future President Trump discussing crypto at Mar-a-Lago last night. They are against it. Biden, uh, Biden doesn't even know what it is. If you ask Biden, sir, are you four against crypto? What's that? What that?

Get me off the stage. You say, get me off the stage. Now, he has no idea, but look, against her is very much against it. The Democrats are very much against it. The Democrats are very much against it. And I say this, a lot of people are very much for it, probably a lot of the people in this group, and I'm fine with it.

I want to make sure it's good and solid and everything else, but I'm good with it. And if you like crypto in any form, and it comes in a lot of different forms, if you're in favor of crypto, you better vote for Trump. Yes, friends, former President Donald Trump has completed his reversal to become the crypto candidate in November's election. The context for this was that Trump held a dinner at Mar-a-Lago last. night to reward large holders of his NFT collection. He used an opening speech at the event to plant his flag firmly in the pro-crypto camp, as you just heard. The pitch is pretty simple. The

Democrats are very much against crypto, and if you're in favor of crypto, you better vote for me. In many ways, this is not surprising. We've seen Trump slowly come around on crypto over the past few months. It started with him testing out an anti-cbdc position in January, which generated a massive response from the assembled crowd, with Trump being surprised this was such a hot-button issue. At that point, though, the words Bitcoin and crypto were not mentioned. Trump's second move towards crypto was during a CNBC interview in February. He said, More and more, I'm seeing people wanting to pay in Bitcoin,

so I can live with it one way or the other. That discussion was still punctuated by Trump saying that he prefers the almighty dollar. Last night's speech was the first time Trump had spoken to broader crypto policy directly, and the first time he articulated a pro-crypto stance without caveats, at least without the caveat that he didn't want it to be fraudulent or whatever. There also seemed to be some awareness of issues facing the industry. During a Q&A session, one NFT holder asked about crypto companies leaving the U.S. To which Trump responded,

Crypto is moving out of the U.S. because of hostility towards crypto. We'll stop it because I don't want that. If we're going to embrace it, we have to let them be here. Now, one caveat, which is probably obvious, but I'll say it just for the sake of saying it, I am not at all interested in using the breakdown to take a political stance. There are plenty of other crypto folks who will use their media platforms to do that. What I'm interested in is the meta shifts happening, what this says about the changing place of crypto in American politics, and to what extent it represents

a shift among the crypto crowd as well. As you might imagine, there was an enormous response to this on social media. Simply Bitcoin host Nico wrote, just like that, the stage is set. A presidential election will determine the regulatory environment for the Bitcoin industry for the next four years. Now, a lot of the commentary was around the political savviness of it. We discussed recently that there had been a new poll that had something like a quarter of Americans caring about crypto as campaign issue. We also had a vote on Sab 121, which we'll get into in a minute, where 21 Democrats crossed the aisle to vote against Gensler's SEC. Discussing Trump's statements, Ron Hammond, the Director of Government Relations at Blockchain Association said, someone saw the DCG paradigm

blockchain association polling yesterday. Like many, I didn't think crypto would be an election issue, but today's polar opposite statements proved that. 21Ds voted against their own party realizing the trend. It's a losing issue to be in the anti-crypto army. Sam Lyman wrote, one in five swing state voters consider crypto to be a pivotal issue at the ballot box. That's around 5 million Americans. In states that were decided by just thousands of votes, crypto could swing the 2024 election. Hello, breakers. Today's episode is sponsored by Ledger.

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Check out the link to the Bitcoin Ledger Nano in the show notes. 5% of all sales of the Bitcoin Ledger Nano go to support Bitcoin Development. Thanks once again to Ledger for supporting the breakdown. One of the big Overton windows that we're seeing shift in the crypto space is a move from crypto people being anti-Biden to being pro-Trump. Alexander Leishman, the CEO at River, said, Everyone is saying Biden being re-elected is bad for crypto because they're afraid to say the T-word. Stop beating around the bush.

You either vote Trump or you get wrecked for another four years. This is an objective fact whether you like it or not. Autism Capital wrote, Shout out to Vivek Rameswamy for crypto-pilling Trump. If you're in crypto and or have self-esteem whatsoever, you have a moral responsibility to vote for Trump in November. Yes, all candidates suck. Yes, everyone lies.

Yes, all roads lead to the same slaughterhouse. But at least this road goes slower and is better for your bags and infinitely more entertaining. Nick Carter writes, Haven't heard from the crypto is nonpartisan and we have no way of telling who is better crowd lately. Today, Orange Man directly endorses crypto, Dementia Joe, threatens to veto Sab 121 overturn and Dems close ranks around FDIC chair corrupt Marty.

There's no ambiguity at all. If you are in any way connected to crypto and you vote D, you are directly voting against your own interests. What about the feeling from crypto progressives? And at pro-synthesis writes, Have you Burger Bros considered that being pro-cry doesn't have to imply being publicly outspoken pro-Trump? Single-iss voting is one thing. Attaching crypto to the Trump alt-right populist bandwagon is another. However, for most crypto-progressives, there's just a lot of sadness around how the Democrats have done this to themselves. Bitcoin Policy Institute fellow Troy Cross wrote, Dem voters are no more likely anti-crypto than Republican voters. The politicians are another matter.

In a separate tweet, he said, Elizabeth Warren's vengeful obsession with the Great White Whale, Orange Whale, could cost Dems the presidency in a tight race. The electorate does not share the administration's hatred of self-custody, or even custody by banks or of Bitcoin or freedom to transact peer-to-peer. Those are positions of elites in power, not voters. Austin Campbell wrote, If the SEC and the chair, Senator Warren, and the Biden administration want to make crypto expressly partisan, the problem is a lot of pro-crypto Democrats are going to vote for the other side. And I guarantee there are very few anti-crypto Republicans.

The most even Jason Meyer, who's the author of a progressives case for Bitcoin could muster up, was a warning to not take Trump's position too seriously. He tweeted, I expect Bitcoiners to have better radar for being pandered to. If a presidential candidate cannot articulate the difference between Bitcoin and crypto, they are not pro-Bitcoin. He continued, scamy person in the world who is the poster child for all that is wrong with Fiat, saying he is okay with

crypto should not be a surprise. It should be a warning about his stance on Bitcoin. Still, it really is the Democrat cell phone that's most on the minds of many. Zach Herbert, the CEO of Foundation Bitcoin Wallet wrote, this is going to draw a lot of young voters to the polls. It was a massive mistake for Biden to so aggressively attack the industry in an election year. Maybe the most interesting comment came from Dennis Porter, the CEO at Satoshi Action Fund, who wrote, Trump just said he has pro-bitcoin Bitcoin slash crypto. Biden so far squarely opposed to Bitcoin slash crypto. The wildest part, I've been hearing rumblings that Biden may pivot on the issue. My two-plus-year-old prediction is now poised to come true. The fight for single-issue voters begins. Now, for what is worth, I have seen no evidence and heard

no rumblings that Biden might pivot on this issue, but Dennis is certainly much more up with political circles than I am. And it is worth noting that this has been a specific set of intentional decisions that were made to be more and more aggressive towards the industry. If you go back to the executive order in March of 2022, it was fairly neutral. I talked a lot on this show about how it could have been a lot worse, how it was mostly all about studying things. But then in late 2022, we started to get Operation Choke Point 2.0, and it was a whole different game. Now, part of the reason Trump's comments struck a nerve is that yesterday the Biden White House made their most brazen anti-crypto move to date. The background was a bill to repeal controversial SEC accounting guidelines. The day featured

the threat of a presidential veto, Democrats crossing the floor to vote alongside Republicans, and finally the vote succeeding in the House. Although the vote was nominally about repealing SEC Staff Accounting Bulletin 121, it spilled over to become emblematic of the administration's overall crypto policy. By way of background, Sab 121 was issued in March of 2022 and purported to clarify how companies should deal with the custody of crypto assets. The stated goal was to safeguard customer assets by changing how custody assets are accounted for. Primarily, the bulletin directed companies to record customers' crypto assets on their own balance sheets. This meant that custodians could no longer provide bankruptcy remote custody, putting customer assets at risk of being caught up in an

insolvency. The guidance also functionally prevented commercial banks from offering crypto custody due to onerous capital requirements for crypto health on a bank balance sheet. The guidance was controversial from the beginning, but criticism peaked last November when the government accountability office took a closer look. The GAO determined that the guidance was actually a rule and that the SEC had improperly avoided going through the usual rulemaking process by issuing it in the manner they did. The GAO ordered that the rule be subject to congressional review. That resulted in a bill to repeal the rule introduced by Representative Mike Flood. One notable thing about the rule is that it was widely recognized as terrible policy.

It actually made crypto custody more dangerous by stripping back bankruptcy protections and locking out highly regulated banks from the industry. Just to give an example, financial regulation commentator Sean Tuffy wrote, Look, I'm not someone who you'd call pro-crypto and even I think the SEC's Sab 121 rule is bananas. To put it plainly, it was bizarre that Democrats decided to defend this rule as hard as they did. Most people took the only explanation to be a desire for a crypto ban, and a commitment to blindly backing any decision made by the Gensler SEC.

So what happened? Well, the first big event was President Biden threatening to veto the bill if the vote was passed. To publicly announce a preemptive threat to veto is unusual to say the least and extremely heavy-handed. Once the bill was called for a vote on the House floor, tensions flared. Republican leader Patrick McHenry said that Sab 121 made a joke of the rulemaking process and ignored other regulatory agencies. Democrat ranking member Maxine Waters, though, said, this bill takes a sledgehammer to fix an issue that merely needs a scalpel, and it does so because my colleagues on the other side of the aisle are not only interested in doing the bidding of special interest groups, they are also interested in attacking and undermining the SEC in every possible

way. But regardless of that statement, once the votes were tallied, the bill passed, 21 Democrats broke ranks with their party to vote with Republicans, even though their votes were not required for the bill to pass. The list of dissenters included longstanding pro-crypto Democrats like Richie Torres, Wiley Nicol, and Josh Gottheimer, however, it extended well beyond those familiar names. The most notable dissent was from Representative Yadira Karavio, the Democrat ranking member of the House Ag Subcommittee on Digital Assets. Shortly after voting, she tweeted, Today I voted to override a decision by the SEC's staff accounting bulletin that discourages banks from serving as custodians for consumers' crypto assets. Consumers continue to invest in

crypto and their safest when well-regulated entities such as banks hold their assets. This strikes directly at the heart of the issue. The White House chose to take a stand on an illogical rule that was made up illegally rather than admit the SEC had screwed up. It seems now there is a growing number of Democrats who are unwilling to provide the SEC with unconditional support. The bill will now pass to the Senate for a vote, and it will be extremely telling on whether it finds its way to the floor quickly or gets mothballed. If we do see a Senate vote before the election, it should serve as a good indication of how much support remains in Democrat leadership for the administration's crypto policy. And when push comes to shove, that's really the reason this bill

matters. It's forcing everyone in Washington to go on the record about crypto policy ahead of the election, making their position crystal clear. The point of all of this, of the Trump-Comps, and the Biden veto promise and the vote is that if it wasn't already, crypto is now firmly on the ballot. That's going to do it for today's breakdown. Big thank you to my sponsor for today's show. Check out the Ledger Bitcoin Orange Nano. 5% of sales will go to support Bitcoin development.

Until next time, be safe and take care of each other. Peace.