The Breakdown - Trump Speaking At Bitcoin Conference

Episode Date: July 11, 2024

As pro-crypto Democrats tried to get more alignment and consideration between the Biden Administration and the crypto industry, Former President Trump announced that he will be speaking at the Bitcoin conference in a couple weeks. NLW provides the latest in crypto politics. Sign up for Permissionless here: https://blockworks.co/event/permissionless-iii Use code BREAKDOWN10 to get 10% off 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, July 11th, and today we are talking the latest in crypto politics. But 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. Well, it is official. Former President Donald Trump will speak at this year's Bitcoin Conference. Trump is slated to make a 30-minute speech at the conference, which will begin in Nashville two weeks from today. Bitcoin Magazine, the host of the conference, called this a significant

milestone for the event, and honestly, that feels like an understatement. Over the past six months, we've seen crypto go from a niche but important regulatory topic in Washington to the community becoming a core constituency for a presidential election. This was underscored earlier this week when Bitcoin and Crypto Policy became a plank of the Republican platform. What's interesting is that in that party platform, the crypto community represents real people. Millions of crypto owners can show up and vote come November, and many of them spread throughout swing states rather than being concentrated in the big cities. As a constituency, crypto owners represent something fundamentally different from other tech interests and lobbying groups. Coinbase's stand with crypto organization demonstrated this clearly,

having gathered 1.25 million voters in counting. So far, Republicans generally and Trump in particular have embrace this constituency, hearing their policy requests and giving them a seat at the table. The Dems have failed to meet this fairly basic standard at the party level, much to the chagrin of many progressive bitcoins of whom there are many, but there are glimmers of hope across a growing sub-faction of crypto-friendly Democrat lawmakers. Still, at the end of the day, we have a presidential frontrunner speaking at the Bitcoin Conference, marking a moment that Bitcoin is well and truly arrived in Washington. The other point worth noting is what the impact of the conference itself might be. Attendance will give the Trump team an opportunity to meet with policy advisors in the community,

shake hands and put names to faces. That engagement could further entrench Bitcoin policy and Trump's election platform. And while that's important, it might not be nearly as important as the impact of Trump showing up to see what the Bitcoin community looks like firsthand. The Bitcoin conference has grown to become more like a rock concert than a crypto conference, and if we know anything about Trump, it's that he loves a massive roaring crowd. There is a fair to decent chance, let's say, that this conference appearance will cement in Trump's mind, that Bitcoiners are a very loud and very large constituency that are worth spending time on. When it comes to the future, Travis Kling wrote, The likelihood of a Trump presidency is the single most mispriced aspect of crypto right now. If we get a

Trump win in November, Gensler has gone immediately and replaced with someone much more pro-crypto, and the entire regulatory landscape for Alts will drastically improve. Now, let's talk about the other side of the aisle. Democrats held their much-anticipated crypto roundtable on Wednesday morning. event was hosted by Rokana and featured comments from Mark Cuban. The stated objective of the meeting was to organize a sit-down between industry figures and the Biden administration, intending to hash out frustrations and talk through next steps forward. Crypto Council for Innovation CEO Sheila Warren has remained a stalwart Democrat supporter throughout the Biden presidency and felt the meeting was productive. She said, many people, myself included, remarked as we left that we were feeling better

coming out than we did going in. Eleanor Terra at a Fox business disclosed a list of 26 crypto executives in attendance spread across exchanges, infrastructure, venture capital, and defy-firmes. Political attendees, in addition to Kana, were Senator Kirsten Gillibrand and Representative Joe Ngoose. The main attraction was Anita Dunn, a senior Biden advisor. She was only able to stay for an hour, but it sounds like the meeting was a confrontational one for the longtime Biden insider. Territ reported that one told Dunn, quote, you guys suck on crypto, and described that exchange as respectful but blunt. Another attendee reportedly said, I'm a lifelong Democrat, but you guys have really got this one

wrong. Most attendees who were willing to go on the record seemed satisfied with the meeting. Coinbase chief legal officer Paul Grewell said, I was much more optimistic walking out than I was walking in. I think it's a sign of progress that Anita Dunn came, even as she's dealing with the NATO summit and a very tense period in the Biden campaign. Sheila Warren also spoke highly of Dunn's engagement, stating her tone demeanor and her body language told me that she was taking this seriously and really engaging with what people were saying. She was very engaged, actively note-taking, all of that kind of stuff. For a government official at that level to be engaged for over an hour, pretty amazing and unusual. She was definitely eager to learn more. We don't have a clear idea of how deep

the policy discussion was during the meeting. One of the few substantive quotes came from Mark Cuban, who closed the meeting by exclaiming, you all have permission to quote me saying that Biden should fire Gary Gensler. It seemed indeed that the SEC was one of the focal points, with one attendee stating, a chunk of the meeting consisted of industry describing their terrible experiences with the SEC. And he did Dunn seemed genuinely surprised by our descriptions of the SEC's actions. One anonymous attendee was still pretty skeptical the Democrats could shift the party's position on crypto in time for the election. Commenting, the Republicans are playing chess and the Democrats are playing checkers.

There's no voting upside to being anti-crypto. Ripple CEO Brad Garlinghouse wants to see more than just a meeting from the Democrats, taking to Twitter to post, Thank you to Ro Khanna for being an exceptional leader in emerging with the crypto industry. This morning's Crypto Roundtable bringing together folks from across the industry with the White House and key congressional leaders is hopefully the first step in moving from words to actual action. Unfortunately, the majority of Dems continue to enable Gensler's unlawful war on crypto, sabotaging the ability for American innovation to thrive.

It's no wonder the GOP has announced a pro-crypto stance. Gensler will go down as the Luddite of his time. Words are easy, action is hard, but necessary. Choose wisely. Voters are paying attention. Now, watching from the outside, I believe that it is absolutely the case that this industry will do better if both major political parties find their own particular reasons for getting behind this industry.

There are plenty of ideological reasons that progressive should be excited about crypto, which have been enumerated incredibly well in books, articles, and beyond. However, it is dramatic to note the difference right now. The most pumped up the folks at this meeting could be is saying they left feeling more optimistic than when they went in, that a senior Biden advisor graced them with her presence for one full hour. Meanwhile, the Republican nominee and former president is going to a Bitcoin conference to speak. The contrast is very hard to ignore, and unfortunately for many crypto folks, including people who have always voted Democrat in the past, will be when it comes to November unignorable. Still, it is undeniable that it is a heck of a lot better to have this type of engagement, small though it may be

so far, as compared to where we were with this administration just a few months ago. Hello, friends, before we get back to the rest of the show, I want to implore you to join me at Permissionless. Permissionless is the conference for Cryptonatives by CryptoNatives, and the reason it's so important this year is that despite regulators' best attempts to push industry founders, devs, and executives out of the U.S., the United States remains the beating heart of crypto. Today, the tide is turning. Policymakers have pivoted from fighting crypto to embracing it. Literally now we are in a major political party's platform, which will lead ultimately to the creation of new financial products, new applications, and ultimately

new adoption. Permissionless is the conference for those using and building on-chain products. It's home to the power users, the devs, and the builders. And perhaps more importantly, I will be there. The location is Salt Lake City. The dates are October 9th to the 11th, and tickets are just $499. If you want to get 10% off, use code breakdown 10. Go to the Blockworks website, blockworks.com. There will be links to register for the conference, and again, you can use Code Breakdown 10 to get 10% off. New polling commissioned by paradigm, meanwhile, shows that Trump's crypto pivot is already paying off. The survey was focused only on Republican voters and sought to take their pulse on crypto policy

and financial freedom. The most jarring stat was that 72% of GOP voters are at least somewhat concerned they could lose access to financial services because of their political or religious views. 26% said they were extremely concerned and non-white voters were far more likely to have a fear of being debanked. And while as tempting as it might be for some to chalk this up two right-wingers reading too much zero hedge? Frankly, it seems to me that this number is way too large for that to be the explanation. Katie Bieber, the chief legal officer at Paradigm wrote that any Americans fear personal retribution by financial regulators should shock and shame those federal financial regulators. But maybe it's actually their goal. Get in line or lose your bank

account. In general, financial privacy was a massively resonant theme. 94% believe their personal finances should generally be private and that government agencies, including the IRS, shouldn't have easy access. Of the voters familiar with CBDCs, 68% of them were opposed to being issued in the U.S. and only 40% were supportive of an official private sector alternative. 84% said they should have the right to send money to another person without a big bank standing in the middle. Demographically, Republican voters were more likely to own crypto than the national average, and again, the number skewed towards the non-white segment of the population, 41% of non-white Republicans own crypto, which is fairly close to the 52% who said they own stocks.

Republicans are also likely to have larger crypto bags, with 40% of those who own crypto having holdings above 5,000 in value. 87% who already owned crypto said they intend to buy over the coming year. The survey showed a huge amount of support for regulatory action, with 60% stating they wanted to see Congress passing predictable rules. Only 16% wanted unelected bureaucrats setting the standards for the industry. Perhaps the biggest point revealed from the polling is that Trump's crypto pivot has helped galvanize the Republican base.

13% of Republicans who weren't planning to vote for Trump said his pro-crypto stance made them more likely to support his candidacy. 24% of those already on the Trump train said they were more excited to vote after learning of his crypto pivot. These numbers all skewed heavily toward younger and non-white voters, exactly the constituency that Trump needs to get to the polling booth to secure a victory in November. The pro-crypto pivot is also helping down ballot, with candidates in battleground states being rewarded for supporting crypto. Note this survey was taken a month ago prior to the debate. Paradigm Head of Governmental Affairs, Alexander Greaves said the takeaways were undeniable. One, he wrote, Republicans love financial freedom.

Two, crypto is hugely consequential to the Republican base. Over in the Senate, CFTC Chairman Rosten Benham has made his strongest pitch to date for urgent crypto regulation. Appearing before the Senate Agriculture Committee, Benham said, I believe the single most important thing I have done and continue to do is advocate to this body to fill the regulatory gap. Congress must act quickly in order for regulators like the CFTC to provide basic customer protections that are core to U.S. financial markets. He added that what concerns him most about

the growth of digital assets has been a lack of action from Congress. Democrat chairwoman Debbie Stab now wholeheartedly agreed, stating, we cannot afford to wait any longer to regulate these assets. The time to act is now. Stab now is leading one of the legislative efforts in the Senate and hopes to share a draft bill with colleagues by the end of the week. The hearing was narrowly focused on regulating digital commodities. It featured the now customary statement from Benham, who reiterated that both Bitcoin and Ethereum are commodities. His view has expanded after recent lawsuits. suggesting that between 70 and 80% of crypto tokens are not securities. This understanding of crypto law is getting less controversial by the day, with the focus now squarely on how to regulate

crypto tokens properly. Benham noted that half of the CFTC's enforcement actions went towards crypto in the past year, adding, it's a staggering statistic for an agency that oversees trillion dollar markets to have to allocate half of its resources to a market it does not regulate or does not get appropriate funds for. It puts both markets at risk and really exposes the fact that there's so much fraud in the crypto space. Benham also took some aim around the poor thinking around regulation by enforcement and not wanting to legitimize the industry by passing clear rules. He said, I do not believe in action will quash public interest for digital assets. It will only result in greater risk to our financial markets and investors. The flawed notion that regulating an asset

class legitimizes it misses the point of our responsibilities. In short, our current trajectory is not sustainable. At the end of the day, the hearing was about getting legislation moving in Congress, but some are skeptical. Ranking Republican member John Boosbe, thinks the bill he is crafting with Stab now doesn't have a path forward, stating, I and my staff have had numerous meetings with those who would be covered by the proposed legislation. The frank and honest feedback we have received from those discussions does not lead me to believe that the necessary level of support for this proposal will be successful, as it currently exists among stakeholders. Marty Bent of 1031 Ventures is one of those stakeholders in opposition

to this legislation, explaining his concerns, he tweeted. Long story short, this committee is pushing to give the CFTC regulatory oversight over spot Bitcoin markets, which is an unprecedented into expansion of CFTC authority into retail commodities trades, whereas in the past, they've exclusively had jurisdiction only over commodities derivatives markets. If the CFTC has granted this expansion of authority, it would mean that they are likely going to require any Bitcoin company to register with the federal government and have enhanced KYC AML requirements. To be clear, this won't only affect exchanges but any company that touches spot Bitcoin. These efforts are being spearheaded on the crypto side via lobbying efforts by Krakken, Coinbase, and Ripple. Not shocking because

this would likely enable them to trivially erect regulatory moats. It is imperative that you speak out against this as it would increase the regulatory and compliance burdens on U.S. Bitcoin companies considerably. Lastly, today, one more note follow-up from earlier in the week. The German government continues to unload Bitcoin as fast as possible. A further 11,000 Bitcoin worth over $600 million was sent to exchanges and market makers yesterday, and more is flying out of wallets this morning. After beginning the summer with more than $3 billion to liquidate, the German government now only has $760 million left. When the selling began three weeks ago, it seemed like the supply overhang could stretch out well into next year.

Now it looks like the Germans could all be done in just a few more days. After a shaky start, Bitcoin's price seems completely unbothered by the German selling. Greg Sipollaro, the head of research at Nydig, considered selling pressure from governments in Mount Cox creditors in a Wednesday note, writing, While emotions and psychology may rule over the short term, our analysis suggests that the price impact from potential selling may be overblown. We aren't oblivious to the fact that other factors may be at play here, but it is reasonable to think that the rational investor may find this an interesting opportunity created by irrational fears.

So friends, that is the story from here. Lots continuing to be interesting in this summer Bitcoin market. For now, though, that is 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.