The Journal. - Inside the Trump Crypto Bromance

Episode Date: September 25, 2024

Former president Donald Trump wants to be the crypto president. With stops at a bitcoin conference and a bitcoin-themed bar, Trump is tapping into an industry that’s eager to support a crypto-friendly candidate. WSJ’s Vicky Huang explains how Trump and the crypto industry have cozied up ahead of the 2024 election. Further Reading: - Trump Hitches His Campaign to the Crypto Crowd  - That Time Donald Trump Walked Into a Bar and Bought a Round Using Bitcoin  - The Crypto Industry Is Trying to Elect Political Allies. The Stakes Couldn’t Be Higher.  Further Listening: - Elon Musk and Silicon Valley Turn Towards Trump  Learn more about your ad choices. Visit megaphone.fm/adchoices

— Former President Donald Trump walked into a bar in Manhattan last week, where he talked to his supporters, signed some menus, and bought a round of hamburgers and diet cokes. — Would you like one? You want a hamburger? — These burgers are killer. They really are. — They're good. — Save your bite. — But when Trump went to pay, he didn't pull out cash or a credit card.

Instead, he brought out his phone— — I'm just going to scan this QR code here with this phone, if you want to take that from them. — — and paid with Bitcoin. — All right, we're done. The first transaction by a president on the Bitcoin protocol. History. You know what that means?

It's history. It's history. It's history in the making. Hello, everybody. The bar Trump was at is called Pubkey, and it's a Bitcoin-themed bar. I guess if you just walk in, it looks like any other bar. That's our colleague Vicky Huang. But if you take a closer look, you would just be able to spot some of the things that crypto

industry people would get immediately. Things like a framed buy Bitcoin sign hanging on one wall, and on another wall, a digital ticker that shows the current value of a single Bitcoin. The day that Trump was there, the cramped bar had red hats lying around that said, make Bitcoin great again. Why was Trump there? This is part of his campaign activity and this all just goes to his pivot to embrace Bitcoin and cryptocurrency.

Trump is definitely making a play for the votes and money of the crypto industry. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, September 25th. Coming up on the show, how Trump became this election's crypto candidate. What's it like to trade crypto on Kraken? Let's say I'm in a state-of-the-art gym surrounded by powerful-looking machines. Do I head straight for the squat rack?

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You will find it at York University's School of Continuing Studies, where we offer career programs purpose-built for you. Visit continue.yorku.ca. The alliance between Trump and the crypto industry has been years in the making. And it's actually a little bit surprising. Not long ago, Trump was vocally not a crypto fan. Here's Vicky again. In fact, just a few years ago, he made these comments saying that Bitcoin and digital assets were based on thin air and Bitcoin is a scam against the dollar. I don't like it because it's another currency competing against the dollar.

Essentially, it's a currency competing against the dollar. I want the dollar to be the currency of the world. That's what I've always said. So when did his view on crypto start to change? It appears that he first made the foray into crypto in 2022 when he launched his first collection of non-fundrable tokens, which are basically crypto's version

of digital trading cards. At the time, a lot of celebrities were launching their own NFT collections. And after announcing he was running for president, Trump did the same. The first collection, a lot of it featured him as a superhero. I'm sure you guys have been looking at

some of the other Trump cards. I like the ones with cowboy hats. And this X Spaces interview that he did recently, he said that he didn't expect it to take off, but the NFTs sold off really quickly. And he started noticing that a lot of people paid for the NFTs sold off really quickly. And he started noticing that a lot of people paid for the NFTs with crypto, not credit cards. And that kind of helped him take notice of cryptocurrencies.

As Trump was starting to warm up to crypto, the industry was facing a chilly reception from the federal government. So in the past couple of years, the crypto industry has really complained about one thing when it comes to being a crypto company in the United States, and that is the lack of regulatory clarity. The tension is over who should be in charge of that regulation and what that regulation looks like. Under the Biden administration, the Securities and Exchange Commission, the SEC, has said that it should be the agency regulating cryptocurrencies.

As far back as 2021, Chairman Gary Gensler has called the industry a wild west that poses a lot of risk to investors. Under him, the SEC has sued some of the biggest crypto companies, alleging that they should be subject to SEC oversight. Most crypto companies disagree, and they say that what's needed is an entirely new kind of regulator. It's a bit of a wonky debate, but it's a debate that really matters to the people who care about crypto. But it's a debate that really matters to the people who care about crypto.

So in the face of that pressure, and with the 2024 election coming up, crypto backers have taken on a new strategy. Last year, they started building themselves up as political players with deep pockets. The industry responded to this crackdown by banding together two companies, Coinbase and Andres and Horowitz, the venture capital firm, got together to build a new super pack for the crypto industry. And the goal for this new super pack was to raise $50 million for 2024's congressional elections and elect crypto-friendly policymakers. And they quickly amassed hundreds of millions

in donations. As of June, that super PAC, called Fair Shake, along with two others tied to crypto, had raised nearly $170 million. So far, that money has gone towards lobbying along with two others tied to crypto, had raised nearly $170 million. So far, that money has gone towards lobbying for crypto's interests at the congressional level. One early race that Fair Shake was involved in was the Democratic primary for a U.S. Senate seat in California.

The super PAC took out a multi-million dollar ad campaign against Representative Katie Porter, who'd been vocal about regulating the crypto industry. And she lost the primary after the Super PAC unleashed an ad campaign that claims that she took cash from big banks, big pharma, and big oil. We don't know how much the ad campaign really affected her campaign, but she lost. Has this pool of money started trickling into the presidential election? So this exact pool of money hasn't trickled into the presidential election. However, President Trump became the first major party candidate to accept campaign donations made in cryptocurrencies.

And he has received at least millions of such donations. According to Trump's campaign, those donations are worth $3 million. And recently, he's been courting crypto enthusiasts more directly. In May this year, Trump invited some of the holders of his NFTs to Mar-a-Lago for a gathering. And many of the people who bought these NFTs work in crypto or are very much involved in

the crypto space. And they went to that gathering and they established this connection with Trump. Soon, big endorsements started pouring in. Among them were Tyler and Cameron Winklevoss, the founders of a crypto exchange called Gemini. And another pair of powerful donors to Trump are Mark Andresen and Ben Horowitz, the co-founders of the venture capital firm Andresen Horowitz, which pretty much pioneered crypto investing in Silicon Valley. They also said that they are supporting Trump for this presidential election. And many other crypto leaders have also come out to say that they support Trump. Just broadly speaking, what do these big crypto figures like about Trump?

One thing I've heard from a lot of the crypto industry executives that he is willing to meet with them and discuss the challenges and opportunities of the crypto industry. For example, in June, Trump hosted this roundtable with some executives from the Bitcoin mining industry and he was talking to them about how he wants all of the remaining Bitcoin to be mined in the US instead of other countries. And some executives said that he asked intelligent questions and showed that he cared.

So that access and willingness to engage with them is one thing that some of the crypto industry executives have said that they like about him. As the crypto industry and Trump have gotten closer, he started making some big promises on the campaign trail. That's next. Next. Are you Dave, a claims-free hybrid driving university grad who signed up online? Well, Dave, this jingles for you. Not Dave, No problem. TD Insurance has over 30 ways to save on home and auto. So...

You can totally save just not exactly like Dave. Save like only you can at tdinsurance.com slash ways to save. TD. Ready for you. In July, our colleague Vicky Huang was at a major Bitcoin conference in Nashville. And the keynote speaker was Trump. Just the fact that he was going to that conference was a huge deal. Donald Trump is a hot ticket at Bitcoin 2024. This Bitcoin conference is sort of an annual gathering for some of the biggest Bitcoin diehard fans. And the fact that Trump was the keynote speaker

of this conference got people very, very excited. And I have to show you guys the line outside the Nakamoto stage here in Nashville, Tennessee. It's insane. So there were a lot of people there. When Trump finally came onto the stage, there was a lot of excitement, a lot of claps. Hello, Bitcoiners. Thank you very much. Hello. It's good to be with you. It's good to be with you. It's good to be with you.

And he talked about how he wanted to make the U.S. the crypto capital of the planet and how he has all these plans for the Bitcoin crypto industry. And he sort of laid them out throughout his 50-minute speech. The conference was packed with both Bitcoin and Trump fanatics. And when he started talking, Trump told them exactly what they wanted to hear. One of the promises he made is for the U.S. to create a national Bitcoin stockpile, which just means that for the U.S. to hold all of the Bitcoins that

it currently has and not sell them. A Bitcoin stockpile is something that a lot of people in crypto have been calling for. The idea is for the US to buy up a chunk of Bitcoin and hold on to it. Crypto backers say that would give the currency some legitimacy and also make its price less volatile. And then the other plan is to set up a presidential advisory council for Bitcoin crypto to sort of establish transparent regulation and set up a regulatory framework. But the most popular promise at the conference was when he said that he would fire the SEC chair, Gary Gensler, on his first day back in the White House.

On day one, I will fire Gary Gensler and appoint a new SEC chairman. Did that surprise you that that was the one that got the most love from the crowd? To be honest, that didn't surprise me. That definitely surprised him. I didn't know he was that unpopular. Right now, much of the industry staunchly opposes Gensler because of the SEC's crackdown on crypto. Gensler's current term as Biden's appointee to the SEC runs through 2026, and there are

legal questions around whether Trump could actually fire him if he became president. While Trump has been busy courting the crypto industry, Vice President Kamala Harris hasn't focused on it. She did comment on the currency for the first time this past weekend, saying at a fundraiser that she would, quote, encourage innovative technologies like AI and digital assets while protecting consumers and investors. Meanwhile, Vicky says there are some skeptics who worry that Trump is making empty promises to the industry.

There have also been concerns around the former president's new crypto project with his two older sons. The project is called World Liberty Financial, and we don't really know too many details about how the project would exactly work yet. What we do know is that this project would have a token associated with it. And this token will be sold and distributed to wealthy investors that meet certain net worth and income requirements. Has there been any concern of conflict of interest with regards to this project if Trump

is elected? Yeah, there's a lot of concerns about conflict of interest if Trump is reelected in November. And for example, if there's anyone who's trying to influence the president, if they were to buy the token, that would be a big concern because that would be seen as currying favor with him. And the other side of this is that much of the crypto industry is rallying behind Trump because they want to see him push friendlier regulations toward the industry. And if he's involved in this crypto project, it would be sort of pushing friendlier regulations

for an industry in which he has a business in. The Trump campaign didn't respond to our requests for comment. What does this alliance between Trump and the crypto industry tell us about where crypto is right now? I think one thing that's very interesting is that crypto and Bitcoin specifically was was created in the aftermath of the 2008 financial crisis as a way to sort of have this currency that's not under government control, that kind of symbolizes freedom and independence from government interference. But now much of the industry wants to have a president supporting the industry. So it seems a little bit ironic how things have turned out.

And so how important is this election to the crypto industry? There are still so many ongoing lawsuits that the SEC has filed against a large number of crypto companies. And some crypto companies have moved abroad because they said they could not operate in what they claim to be a hostile regulatory environment, that is the US. So the stakes are high for the crypto community. And so, yeah, having a crypto-friendly administration in the White House would be a huge boom for this industry. It would be, if he keeps his promise. That's all for today, Wednesday, September 25th.

The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Ben Foldy, Alex Leary, and Caitlin Ostrov. Thanks for listening. See you tomorrow.