At a recently concluded cryptocurrency conference in Nashville, Tennessee, former United States President and prominent Republican face Donald Trump, who is eyeing another term as the crucial 2024 polls loom, declared his goal to make the world’s largest economy the “crypto capital of the planet.”
The statements brought digital currency to the fore in a presidential race where the two front-runners (including Democrat and the current Vice-President Kamala Harris) attempt to set themselves apart on contentious themes. The political focus coincides with a boom in the value of Bitcoin, the most popular cryptocurrency, which has increased by 60% this year.
Donald Trump, who opposed cryptocurrencies when he was the president (from 2016 to 2020), has started a blitzkrieg push to promote digital assets. Kamala Harris, the presumed Democratic contender, has not said anything about the matter yet.
Senior scholar in economic research at the Brookings Institute Aaron Klein told ABC News, “This is a truly live problem,” citing important demographics like young voters who trade cryptocurrencies disproportionately.
A Game-Changing Bill And Musk Warning
Donald Trump has promised a “Strategic National Bitcoin Reserve” in his second term, apart from predicting the currency potentially eclipsing gold’s USD 16 trillion market capitalisation. Meanwhile, Senator Cynthia Lummis has introduced a bill to direct the United States Treasury to purchase 1 million bitcoins worth almost USD 70 billion—while MicroStrategy’s Michael Saylor has upped his huge bitcoin price prediction.
“If I am elected, it will be the policy of my administration, United States of America, to keep 100% of all the bitcoin the US government currently holds or acquires into the future, we’ll keep 100%. This will serve, in effect, as the core of the strategic national Bitcoin stockpile,” Trump said during his speech at Bitcoin 2024.
Wild rumours had swirled in the leadup to the event that the Republican could announce about creating a US bitcoin strategic reserve, with analysts comparing it to both the US’s gold and oil reserves. And to some extent, Trump has lived up to the expectations.
The United States currently holds around 212,000 seized bitcoins, worth some USD 15 billion, compared to its USD 600 billion worth of gold reserves.
“Soon [bitcoin] will be surpassing the entire market cap of silver. It’s not bad about gold. How about gold? Let’s go gold. One day it probably will overtake gold, but based on the way it’s going now, it could very well be a possibility,” Trump said further.
After Donald Trump’s speech, pro-bitcoin and crypto Republican Lummis unveiled her bill.
“We know from modelling the numbers and past experience with Bitcoin, that it is capable of being an absolute game changer for the mess the United States has gotten itself into with its debt and its deficits,” Lummis told The Block in an interview ahead of the announcement.
“We have a strategic oil reserve. We hold gold. So the idea of a strategic reserve used specifically to reduce the debt solves so many problems that it almost seems inherently obvious, but it’s nevertheless a big step,” the Senator added further.
Ahead of Trump’s speech and Lummis introducing her bill, Michael Saylor, the founder of software company-turned-bitcoin buyer MicroStrategy, predicted the bitcoin price could surge to USD 49 million per bitcoin by 2045, which would mean bitcoin’s total market capitalisation would be almost USD 100 trillion.
Donald Trump wants to see the United States reclaim its position as the world leader in industry, innovation, and technology, as the Bitcoin conference showed.
That encompasses cryptocurrency and other industries, senior Republican Brian Hughes said in a statement to ABC News, while adding, “Kamala Harris and the Democrats are attacking tech innovators and others in the field, putting needless burdens and barriers in the path of our country’s future generation of business leaders.”
Charting Trump’s And Harris’ Positions On Crypto
In his first term, Trump harshly attacked cryptocurrency, calling it “extremely volatile and built on thin air” and even commenting, “Unregulated Crypto Assets can facilitate illicit activities, including drug trade.”
However, Trump 2.0, if it happens, will see the Republican course correcting himself. He has already pledged to loosen cryptocurrency regulations and create the first National Strategic Bitcoin Reserve.
Additionally, Trump declared that he would “fire” Gary Gensler, the chair of the Securities and Exchange Commission (SEC), whom many cryptocurrency supporters detest for his strict regulatory policies.
Donald Trump added that he would like to see expanded bitcoin mining by American firms, even though he called cryptocurrency a ”scam” in 2021.
Digital asset proponents say that cryptocurrency users are becoming a growing political force as the Presidential election nears. Some crypto advocates are backing Trump, and any move by the US to create a national bitcoin reserve would likely be seen by them as a major move to legitimise cryptocurrency.
Meanwhile, crypto executives are upset with the SEC’s enforcement actions under the incumbent President Joe Biden. The agency has alleged that several crypto companies facilitate the trading of digital assets on their platform that should have been registered as securities, which the firms deny.
A group of nearly 30 Democratic lawmakers and Congressional candidates sent a letter to the Democratic National Committee and Kamala Harris in July 2024, urging them to take a ”forward-looking” approach to digital assets.
Several well-known Silicon Valley heavyweights have endorsed Trump in recent weeks, including Tesla CEO Elon Musk, who is well-known for his support of cryptocurrencies. Cameron and Tyler Winklevoss, two millionaire cryptocurrency entrepreneurs who rose to notoriety in the early 2000s after suing Facebook CEO Mark Zuckerberg, are among the other backers of Trump.
On the other hand, experts believe it’s still difficult to determine Harris’ precise stance on cryptocurrencies. They pointed out that the federal trial of FTX creator Sam Bankman-Fried and the regulations Gensler implemented regarding cryptocurrencies have led to a general perception that the Biden administration is strict on cryptocurrencies.
As per Aron Klein of the Brookings Institute, Democrats have differing opinions on crypto policy. Senator Elizabeth Warren, a Democrat from Massachusetts, has been a vocal opponent of cryptocurrencies, for example, and tech billionaire and Kamala Harris backer Mark Cuban has advocated for a more accommodating approach to digital assets, as Klein pointed out.
Experts speculated that Harris would eventually try to moderate the Biden administration’s stance on cryptocurrencies. As to the Financial Times report, the Harris campaign has reached out to leading cryptocurrency companies with the aim of “resetting” the relationship between the industry and the Democratic Party.
Exchanges have reportedly taken place with representatives from Coinbase, Circle, and Ripple Labs, three heavyweights in the sector. The goal is to ease the tensions born from the perceived hostile positions of the Biden administration.
Kamala Harris’ advisors insist that this openness is not primarily aimed at attracting campaign funding. Instead, it is about laying the foundations for a constructive relationship, to develop a balanced regulatory framework for the sector.
Donald Trump’s course correction is already benefiting the Republican campaign, as the pro-crypto super PAC Fairshake has raised more than USD 200 million from leading investors. The Trump campaign itself has received about USD 3 million in crypto donations since it announced that it accepts this type of contribution.
The Harris campaign seeks to counter this by promoting a vision of “responsible capitalism,” as it hopes to reassure the crypto industry about the party’s intentions.
However, as per the reports, Kamala Harris is considering anti-crypto Michigan Senator Gary Peters as her running mate for the upcoming polls. Peters supported the Money Laundering Act of 2023 which talked about the use of crypto in illicit terror financing.
Crypto industry veterans have warned Harris about the anti-crypto stand initiated by Democrats. Galaxy Digital chairperson Mike Novogratz has advised Harris to beware of Senator Warren who has been constantly attacking the industry with regulations. Similarly, XRP lawyer John Deaton, who’s fighting the next elections against Warren, said that Kamala Harris should fire SEC Chair Gary Gensler.
Klein told ABC News, “I think Harris’s campaign will have some degree of strategic ambiguity between the Biden administration’s policy and what the Bitcoin sector wants.”
The Future
The United States is not the first country to keep Bitcoin in its national reserve. El Salvador had done it four years ago but unfortunately for them, their acquisition was a mere prelude to a market crash.
The United States acquiring such massive stockpiles of Bitcoin might make the cryptocurrency more stable and immune to high volatility. Or it could bring the world’s largest economy crashing down. Only time will tell.
Donald Trump has already made his mind clear on the sector’s future in his second Presidential term (if that happens). And the stance has benefited the Republicans, in terms of acquiring election donations. Kamala Harris, on the other hand, wants to correct her party’s relationship with the virtual currency players as well. However, her stance on the matter has been muted till now. And if Senator Gary Peters emerges as her running mate, the industry may not take it positively.
One thing for sure is that the crypto industry has somehow emerged as a political force in 2024. Even though there are other big economic issues than the virtual currency, based on which Americans will cast their votes, when it comes to acquiring campaign donations, both Republicans and Democrats will love to have the crypto players on their side.