The Breakdown - VP Harris' Likely Economic Appointments Seem to Spell Doom for Crypto

Episode Date: August 15, 2024

As hopefully as many crypto dems have been about the potential for a reset relationship between Democrats and the industry, recent reports around likely economic appointments in a Harris administration have struck a dagger through that hope. 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 Wednesday, August 14th, and today we are talking beyond the speculation, some evidence around where a potential future Harris administration might land when it comes to crypto. 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. conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit. 0.ly slash breakdown pod. All right, friends. So one of the things that we have been trying to parse out is, of course, how real any potential Democrat crypto pivot have been. On the one hand, there have been those in the industry who are completely convinced that it's all just

lip service to the extent it's anything at all. And then there are others, particularly those on the progressive side of the aisle who are some combination of desperately hoping slash trying behind the scenes to actually push a change. I think, though, that there is a a broad sense, even among those who are advocating for change and who are hoping for change, that change can't just be lip service, it has to be action. And so, of course, given that, one of the things that people have wanted to know is who's actually going to be in charge of these key areas in a potential future Harris administration. Remember, the assessment of many is that the big part of the Biden administration's issue with crypto wasn't because Joe Biden

himself is sitting there antagonistically pissed off because he lost a bag on Bitcoin or something, but instead because he cut a deal with Elizabeth Warren to give her way more control over the economic appointments in his administration than we might have liked. Well, now we are starting to get pictures of who might be involved in the next Democratic administration, and those hoping for a change so far look to be disappointed. The whispers around this Democratic crypto pivot

have been intensifying over the past few weeks. They were aided and abetted by the fact that key industry figures were able to get meetings with senior staff for the first time in years. Two weeks ago, Politico framed the situation as a tug of war. They wrote that, quote, competing factions of Democrats are pushing Harris to adopt their position on crypto policy, an issue that's taken on outsized political importance because of the industry's massive spending on this year's elections. The pro-crypto faction, as you guys have heard, has been centered

around representatives Wiley Nicol and Richie Torres, although there is now a fairly deep bench of Democrat lawmakers who are at least open to a crypto pivot. Nicol was hopeful at the time telling Politico, if the approach was going to be identical to Joe Biden, I wouldn't be on the phone talking with you. We wouldn't be talking about meetings. We wouldn't be talking about public policy issues. And so I think the initial steps or initial indications we have are good, and we'll continue to see more in the coming weeks. The representatives of the anti-crypto faction, of course, remain the same, led by Elizabeth Warren, and including a long list of senior administration staffers. The quotes from this faction suggested that snuffing out any chance of a crypto pivot was just a matter

of time. Perpetual antagonist Representative Brad Sherman, for example, said, if she listens on the issue of enforcing our income tax laws, our sanctions laws, our human trafficking laws, she'll continue to reach the same conclusion that the Biden-Harris administration has made. While new reporting suggests the Warren faction has won out, and the status quo will continue under a Harris administration. We had already heard that Treasury Undersecretary Brian Nelson had been hired as an advisor last week. Nelson was in charge of the crackdown on mixers and illicit finance within crypto. However, industry figures generally viewed him as a pragmatist that was open to working with crypto firms on compromised solutions. Bloomberg now reports that Harris

has brought in Brian Dees and Barat Ramamerti as economic advisors. They have been hired to, quote, polish a refreshed economic pitch drawing on the Biden and Harris records. Sources suggest that tax increases are the cornerstone policy and will still lean on the Biden narrative of increasing taxes on, quote, wealthy crypto holders. Bloomberg writes that there are, quote, no plans for Harris's campaign to announce sprawling new policies such as on cryptocurrency. As for the new personnel, they seem to represent a through line to the longstanding Democrat status quo. Brian Dees started out during the second Obama administration and was recently Biden's director of the National Economic Council. His largest contribution to crypto policy was a blog post

published by the White House in January 2023, called the administration's roadmap to mitigating cryptocurrency's risks. He called for enhanced enforcement and encouraged regulatory initiatives that would separate risky digital assets from the banking system. In other words, Operation Chokepoint 2.0. Indeed, the same day the blog was published, the Federal Reserve rejected custodia banks application for membership and access to central bank infrastructure. Barat Ramamerti began as an economic policy advisor on Elizabeth Warren's 2020 presidential campaign. The following year, he joined the Biden administration as deputy director of the National Economic Council. Fortune had framed Ramamerti as the White House's top crypto-critic.

Bloomberg also reported that the shortlist for Treasury Secretary under Harris is unchanged from the Biden administration. They listed current NEC director, Lail Brainerd, Commerce Secretary Gina Raimondo, Deputy Treasury Secretary Wally Adiyadh, and Chief of Staff, Jeffrey Zanz. Adiyamo is particularly noteworthy as he has a working relationship with Harris. Last week, Adiyamo told a group of crypto executives that there was no plan to deny the industry access to financial services. Galaxy Digital Head of Research Alex Thorin, though, unpacked the role this group had played in designing and rolling out the crypto crackdown in early 2023. He found their fingerprints on everything from Titan banking supervision to intervention

on stablecoin legislation. In conclusion, Thorin wrote, people are policy at the end of the day. And if Brian Dees, Barat Ramamerti, Wali Adayamo at all, are set to lead economic policy in a Harris-Waltz administration, it's very unlikely the administration will soften its stance on crypto. The sentiment from crypto-twitter is that this is pretty much a wrap for any hopes of a crypto pivot from Democrats. Nick Carter, who has, of course, been chronicling every step of Operation Chokepoint 2.0 since it began, actually named all the way back in February 2003 Barat Ramamerti as the driving force of the policy. Carter tweeted,

Barat Ramamurdi means it's over, over. Harris appears to be Warren 2.0. This guy was a named architect of Chokepoint 2.0 and a career war in Flunky. It's over. Industry folks who already supported the Trump ticket viewed this as the final confirmation that nothing would change under Harris. La Professor J.W. Verrett commented, she is hiring the creators of Choke Point 2.0, the people who started the crypto crackdown. At this point, anyone in crypto who supports Kamala is anti-crypto no other way to put it. More interesting were the takes from those on the left who had been hoping to see real change out of Harris. Austin Campbell of Zero Knowledge Consulting tweeted, this is rather unfortunate, but I'm forced to agree with Alex Thorne here.

If the Harris administration is going to continue Operation Chokepoint 2.0, it's impossible to support them from an ethical standpoint, and I say that as a Democrat. Unless you believe administration should be able to pick winners and losers to get banking access, depending on their preferences, this is a non-starter. And if you do believe that, you'll believe it is okay for a future Trump administration to designate things like green energy producers in public sector unions as high-risk industries that should be debanked, right? I will say I personally don't believe that is okay,

and I also don't believe it's okay to be doing this to crypto. At some point, it is my hope that the U.S. political scene returns to a belief in civic norms rather than unrestricted warfare at all costs through the systems that are hollowing out the rule of law and core rights of Americans, and I mean that about all sides. This sentiment echoes the paradigm polling we featured on yesterday's show. That survey showed that Democrat voters are against weaponization of the banking system precisely because the sense that it will one day be turned against them. Jason Meyer, the author of a Progressive's case for Bitcoin, made the case that real change will need to come from these voters, tweeting, it's unlikely that Harris will take a positive approach to Bitcoin

and that Trump will be incapable of differentiating it from crypto. Folks will trip over each other to villainize her, but maybe we should have been focusing on voters this whole time instead of the politicians. Even the industry figures who have tried to stay neutral over recent months now seem to be seeing the writing on the wall. Blockcork's co-founder Mikey Bolito, for example, wrote, this is really disappointing to see. I don't care about political theater, but appointments like this will have very real consequences for our industry. I still believe the best outcome for crypto is to be neutral, but I can't ignore what's right in front of me. 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 parties 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. To the extent that there is a silver lining take, it came from veteran Bitcoiners. These are the folks who have seen every possible variation of a government crackdown over the years, and are always there to remind us that blocks will be added every 10 minutes no matter who wins the election.

Mike Alfred tweeted, if Kamala Harris wins, America will survive and Bitcoin will thrive. If Donald Trump wins, America will survive and Bitcoin will thrive. Don't believe all this hype about a fork in the road for humanity, the end of democracy, the end of the country, etc. It's political scare tactics. Dysopia Breaker wrote, I had a brief moment of hope for good policy that is being progressively extinguished, build blockchains that work regardless of who is in the White House. The U.S. cannot stop crypto any more than they could stop the transistor. We can only shoot ourselves in the foot and move the centers of innovation out of our tax base.

Others were simply tired of the entire thing. With Masari co-founder Dan McArdle tweeting, and more or less fully summing up my emotions at this point, approximately zero people in the Bitcoin and crypto space want to be paying tons of attention to politics. My general belief, just observing what's going on, and I kind of got into this a little bit on the show with Scott Melker last Friday,

is that for most establishment Democrats, even those who are in crypto, the concerns they believe they have with Donald Trump are so immense that this is not really an election about policy differences. The entire campaign, and it's been this way for quite some time, is about personalities. It's about the risks that different personalities bring with them. The thing that makes that so difficult when it comes to this sort of crypto pivot,

or any policy change you'd want to see between two administrations that are on the same side of the aisle, is that there's just not that much incentive. The excitement around Kamala and Tim Walts among Democrats right now isn't about different policy positions they've held, at least not primarily. It's about them having a pulse compared to Biden and about new rhetorical techniques that they picked up that have been making traction against Donald Trump and J.D. Vance. In media gladiator politics, policy tends not to matter. And so the question becomes,

why take the time to actually try to figure out something new, rather than just select administration officials from the people who are already there? Adam Cochran tried to make this argument as an indicator that it might not be as bad as it seems, writing, when you cobble together a last-minute campaign, you're going to pick a lot of pre-vetted advisors and officials. That doesn't mean it forms your policy and pointing to prior actions as an indicator of future policy is bad faith. Meanwhile, her advisors are having round tables with crypto, reaching out to lobbying groups, and making real progress. If you want policy change engage, it's really that simple. I understand what he's trying to say, but I think most people in

crypto are pretty nervous about the same folks who are so clearly institutionally antagonistic to this industry, in specific, not just in general, right? We're not just talking about the Democrat Party in general here. We're talking about specific architects of previous negative strategies, being elevated to positions of power. Still, to the extent that the signs from the Harris campaign are increasingly clear, Democrat supporters in the industry aren't giving up on engagement just yet. A few weeks ago, a new group formed calling themselves Crypto for Harris. They've scheduled their first virtual town hall event and remain optimistic on changing minds within the Harris campaign. Jonathan Padillo, one of the founders of the group, said,

This event on Wednesday is really a starting point. Our bigger goal is to really engage with the Harris campaign in a meaningful way and kind of do a formal reset. Padilla was the previous head of blockchain strategy at PayPal. The event will feature speakers, including representatives Richie Torres, Wiley Nickel, and Adam Schiff. Also speaking will be Mark Cuban and Anthony Scaramucci, who've been increasingly tapped to represent the crypto industry viewpoint in Democrat circles. Given that the Democratic National Convention begins next week, many believe that right now is the window of opportunity to help inform the Democrats' formal position on crypto policy.

Said Padilla, we're engaging with various elements at the campaign and early indications point towards a willingness to sit down and figure out a path forward. As to those staffing decisions so far, he said, I think you're going to see a number of people in the campaign, both crypto and non-crypto. It's really incumbent upon the space to let the campaign know that some people are more preferential than others, but shaping policy is going to have give and take, and that's how policy is made. So you can probably tell that my bias is to listen to appointments as one of the clearest signals we have. And of course, that makes me very nervous about this particular set of prospects. If I think that there is one very clear X factor here, it's Kamala Harris herself.

While I believe it is a reasonable position for people to point to the fact that she was the vice president for four years, meaning that Operation Showpoint 2.0 happened on her watch, I think it also the fact that vice presidents don't always have the biggest role in policy and tend to be deployed to very specific policy areas, and that ultimately right now, we don't really know what Kamala thinks herself of this industry. We know that she hadn't taken a strong enough position to try to intervene, but what would her position be if she was actually in charge? Eleanor Territ of Fox business has been tracking this angle. She wrote, based on the conversations I've been having with Dems and industry and government, regarding

the Harris Crypto Reset, it seems that her campaign staff have been putting in the legwork with meetings, but there's only so much that can be said and done because no one actually knows what Kamala Harris herself is thinking regarding crypto policy. There's a push this week from industry Dems to mobilize support for Harris, but it would be helpful for voters to get a clearer idea of her own thoughts on digital asset policy, especially given recent reporting on who she's planning to recruit as economic advisors. It would be awesome to see and hear from the VP during the Crypto for Harris Town Hall tomorrow. I agree entirely, but I am not holding my breath there. Still, of course, if there are interesting developments, we will bring you them here, but for now, that is going to do it for today's breakdown.

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