The crypto bros poised to make billions from Trump presidency as Bitcoin booms
11/11/2024 23:49
Donald Trump has been a late convert to crypto.
Donald Trump has been a late convert to crypto.
“I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he said during his first term. “We have only one real currency in the USA … It is called the United States dollar!”
However, during his victorious run for the White House this year, Trump’s tune changed dramatically – to the benefit of tech bros around the world.
On the campaign trail, he vowed to establish a “strategic national Bitcoin stockpile”, attacked the Biden administration’s crackdown on crypto, and even launched his own digital coin.
His new-found enthusiasm meant last week’s election result sent Bitcoin rocketing to an all-time high, spurred on by the hope his administration will take a far more benevolent approach than Joe Biden’s.
Momentum led to the world’s most popular digital currency rising to a record $82,000 on Monday morning, triggering a windfall for some of the biggest players in crypto – many of whom swung behind the Republican candidate in recent months.
According to industry website Coinmarketcap, the total value of all cryptocurrencies has climbed by around $530bn (£411bn) since the election, now standing at $2.8 trillion.
Shares in Coinbase, the cryptocurrency exchange, have also climbed by more than 50pc, leading to a $3.3bn windfall for its chief executive Brian Armstrong.
“DC received a clear message that being anti-crypto is a good way to end your career,” Armstrong wrote after the result.
Tyler and Cameron Winklevoss, the Bitcoin-backing identical twins who run the online exchange Gemini, also saw the value of their holdings surge.
The twins, who have become billionaires thanks to cryptocurrency, both donated to the Trump campaign.
The morning after the election, Cameron Winklevoss tweeted: “gm [good morning] @GaryGensler – you’re fired!”, referring to Biden’s head of the Securities and Exchange Commission, who has led a series of enforcements against cryptocurrency companies.
JD Vance, Trump’s vice president, has also consistently owned Bitcoin since 2021, according to recent financial disclosures.
His most recent filing in August shows he owns between $250,000 and $500,000, although this is a relatively small part of his $4m in assets.
The cryptocurrency industry has become an astonishingly effective Washington lobbying force in recent years.
Three political action committees, Fairshake, Defend American Jobs and Protect Progress, spent more than $133m supporting both Republican and Democrat candidates who voiced pro-crypto views during the campaign.
As of Monday morning, 52 out of 56 House and Senate candidates backed by the three organisations had won election or were leading races.
Armstrong, whose company was one of the biggest donors to pro-crypto campaign groups, said it would be the “most pro-crypto Congress ever”.
But Trump himself was the big prize. While Kamala Harris had made a late attempt to embrace the crypto industry, pledging to support innovation in digital assets, the Trump campaign had courted Bitcoin backers for months.
In June, Trump attended a fundraising dinner at the San Francisco mansion of prominent backer David Sacks, promising to be a “crypto president”.
The campaign’s biggest crypto moment came when Trump delivered a speech at the annual Bitcoin conference in Nashville, an event that came after months of petitioning from cryptocurrency entrepreneur David Bailey.
At the conference, Trump warned: “If we don’t embrace crypto and Bitcoin technology, China will, other countries will, they’ll dominate, and we cannot let China dominate.”
He also vowed to fire Gensler on “day one” and promoted crypto fans’ pet policies such as self-custody, the idea that individuals can store their own Bitcoin, rather than having it saved in an online wallet.
In a later interview to promote his own cryptocurrency venture, Trump declined to provide any concrete details on the business and admitted he relies on crypto advice from his 18-year-old son Barron.
However, it was already clear he had won over the industry.
Crypto’s anarchist roots meant the movement spent years avoiding politics. But Biden’s appointment of Gensler, who embarked on a series of crackdowns, as well as the anti-crypto campaigning of Senator Elizabeth Warren, put the industry on the defensive.
Crucially, it also turned its investors against the Democrats.
Last year, Gensler’s Securities and Exchange Commission charged cryptocurrency company Kraken with violating US securities laws. The company is fighting the case, which is scheduled for trial, while this summer Kraken founder Jesse Powell donated $1m to Trump’s campaign.
Biden’s Justice Department also pursued the founders of what were the world’s two biggest crypto exchanges, Sam Bankman-Fried’s FTX and Changpeng Zhao’s Binance.
Bankman-Fried is now serving a 25-year prison sentence over FTX’s collapse, while Zhao, who pleaded guilty to federal charges over anti-money-laundering controls, recently left prison after a four-month sentence.
Peter McCormack, a Bitcoin investor and entrepreneur, says that Trump’s election amounts to a rejection of that crackdown and “vindication” for crypto enthusiasts.
“The Bitcoin industry has been under various attacks for the history of its existence,” he says. “Under the Biden administration, there was a lot of pressure. That pressure now feels like it’s gone. We know that Trump is going to be pro-Bitcoin, pro-freedom and pro-supporting these technologies.”
Analysts at Standard Chartered call the idea of a strategic Bitcoin reserve, mulled by Trump, as “low-probability but high-impact”.
However, they anticipate a sweeping deregulation programme and lighter-touch enforcement under a Trump-controlled Congress.
“With a Republican sweep in the US election now looking likely, we believe we have entered the crypto summer,” they said, predicting that Bitcoin could hit $200,000 by the end of next year.
At this level, the total value of all Bitcoin would hit $4.3 trillion, exceeding the entire money supply of the British pound.
That would only endear Trump more to his new wave of crypto backers – making them even richer in the process.