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It is not particularly fashionable to point out when Donald Trump gets something right (whether accidentally or not). But for the record, back in 2021 he was right about crypto. Having two years earlier pointed out that crypto is “not money” and that its value is “based on thin air”, the former president said bitcoin “just seems like a scam”, suggested crypto was “a disaster waiting to happen”, and said “the bitcoins of the world” should be regulated “very, very high” [sic].
That was less than a year before the world of crypto imploded spectacularly. From May 2022 onwards, a series of exchanges, tokens and other crypto projects collapsed in quick succession, wiping out tens of billions of dollars in supposed “value” overnight. Crypto prices and the market for “NFTs” — a type of digital token that is just as worthless as any other but pretends to be otherwise — tanked. Regulators had not only been failing to regulate crypto “very very high”; they had been asleep at the wheel. In December of that year, crypto’s most notorious criminal, the man known as SBF, was arrested on charges of fraud and conspiracy that he would later be given a 25-year prison sentence for.
But Trump, alas, is no longer right about crypto. As the market recovered, he suddenly went from “not a fan” to seeming positively enamoured.
He vowed last month to stop Joe Biden’s crusade to crush crypto and said that he would support the right to self-custody — technical language that sounds very unlike something Trump would have come up with himself. “To the nation’s 50mn crypto holders I say this,” he told a crowd at a libertarian convention. “I will keep [Democratic senator] Elizabeth Warren and her goons away from your bitcoin.”
It sounded suspiciously like Trump had been having some deep and meaningfuls with the crypto industry. Indeed, a couple of weeks ago he hosted a group of bitcoin miners and industry executives at his private members club/permanent residence Mar-a-Lago. One of those present, the CEO of BTC Inc, told CNBC that “as an industry we are committed to raising over $100mn and turning out more than 5,000,000 voters for the Trump re-election effort”. You can see why Trump might have found their arguments so persuasive.
There is not even any kind of an attempt to hide the influence-buying; quite the opposite in fact. On Tuesday, the incumbent congressman for New York Jamaal Bowman was defeated in the most expensive primary election in the Democratic party’s history. A vocal critic of Israel, who lost to a pro-Israel rival, he had also voted against pro-crypto bills. Afterwards, Tyler Winklevoss — who along with his twin brother Cameron runs the Gemini crypto exchange — gloated on X: “Politicians everywhere need to understand that this is what happens when you pick a fight with the crypto army.”
Last week, the Winklevoss twins each gave $1mn to the Trump campaign (a portion of which has since been refunded for exceeding maximum individual contribution rules), calling him the “pro-crypto” choice. They have also donated $4.9mn to a pro-crypto super Pac — an independent fundraising committee that can receive unlimited funds from individuals, companies and other groups — named “Fairshake”. This has already raised more than $177mn, second only to the “Make America Great Again” super Pac, with just over $178mn.
Fairshake was one of the big contributors to Tuesday’s New York primary, spending over $2mn on ads targeting Bowman. Along with the Winklevii, a number of other crypto billionaires and their firms have contributed huge sums to Fairshake, including crypto firm Ripple, which has donated a tidy $45mn; crypto exchange Coinbase, with just over $45mn; and “techno-optimist” Marc Andreessen and business partner Ben Horowitz, who between them and their business have donated almost $70mn.
According to data compiled by AdImpact, Fairshake and its affiliate pro-crypto super Pacs, “Defend American Jobs” and “Protect Progress”, have already spent more than $37mn on ads in the primaries. Many of the crypto-friendly candidates they back have won their respective House and Senate races.
We should be very concerned indeed about the influence and scale of this rapidly growing crypto lobby. Apart from anything else, the lobbyists do not represent the interests of America’s crypto holders. Regulators are not going after retail investors, but the crypto firms whose founders have made billions by creaming off profits from those retail investors.
Their allegiance to politicians looks similarly uneven. And the idea that a group of bitcoin executives can provide Trump with 5mn voters is a farce that even he must be able to see through.
jemima.kelly@ft.com
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