Donald Trump used to rail against cryptocurrencies, calling them a “disaster waiting to happen” and saying that bitcoin seemed “like a scam.” Now, he’s vowing to build a “crypto army.”
On Tuesday, the Trump campaign announced that it would accept donations in crypto, including bitcoin, ether, and dogecoin. Many crypto fans embraced the announcement on social media, arguing that it was proof that crypto will be a key issue in the coming election. Others, however, said that it simply reeked of opportunism.
Here are the factors leading up to Trump’s about-face on crypto.
Is crypto left or right?
When crypto broke through into mainstream consciousness three years ago, its supporters came from both sides of the political aisle. Many crypto fans had libertarian leanings: Minnesota Republican Tom Emmer, for instance, described crypto as a boon to free markets and privacy. Some Democrats including Cory Booker, in contrast, emphasized how crypto could be a “democratizing” force and lead to increased financial access for people who had long been shut out of traditional banking.
For a while, crypto’s potential alignment with progressive ideals was boosted by the success of FTX founder Sam Bankman-Fried, who became one of the top individual donors to Democratic candidates in the 2022 election cycle and preached about “financial inclusion and equitable access.” But in reality, Bankman-Fried was secretly donating to both parties with the underlying goal of getting pro-crypto candidates into office. After FTX combusted, some of the Democratic politicians that Bankman-Fried had embraced distanced themselves from the industry.
Read More: The Bombshell Evidence That Led to Sam Bankman-Fried’s Conviction
At the same time, several prominent Democrats went to war on crypto, arguing that it was predatory and posed a major risk to the American economy. Elizabeth Warren vowed to build an “anti-crypto army,” while Gary Gensler, the chair of the Securities and Exchange Commission and a Biden appointee, used his position to prosecute bad actors and stifle the crypto industry in the states.
The anti-crypto campaigns from Warren and Gensler drew the ire of many crypto fans, who viewed the pair as an existential threat to their industry. Conversely, right-wing candidates with pro-crypto stances, including Vivek Ramaswamy, found friendly audiences at crypto conferences.
Given this larger climate, supporting crypto now allows Trump to place himself in direct opposition to Warren—and potentially galvanize support from an industry that skews young and male. The Trump campaign made this overly clear in its statement on Tuesday, claiming that its acceptance of bitcoin donations was part of its opposition to “socialistic government control” over the U.S. financial markets. “As Biden piles regulations and red tape on all of us, President Trump stands ready to embrace new technologies,” the statement read.
A changed crypto landscape
President Trump isn’t the only politician to soften their opposition to crypto. Last week, many Democrats, including Chuck Schumer, broke with Warren and Gensler in order to reject the SEC’s efforts to make it harder for banks to hold digital assets. Their decision marked another significant loss for Gensler: Last summer, his efforts to block the creation of a bitcoin ETF (a type of investment vehicle aimed at mainstream institutional investors) were rejected by a federal judge. Since that decision, bitcoin ETFs have surpassed hundreds of billions of dollars in trading volume, and a similar ETF for the cryptocurrency ether appears poised for approval as well.
This week, the House of Representatives will vote on a Republican-driven pro-crypto bill called the Financial Innovation and Technology for the 21st Century Act. A handful of Democrats have indicated support for the bill. And while the White House opposes the bill, it said in a statement that it was eager to work with Congress on legislation to promote “the responsible development of digital assets and payment innovation” in the U.S.
But that bill’s path to passing in the Senate is murky. And many everyday Americans are wary of crypto: three-quarters of respondents to a 2023 Pew study said they were not confident that the current ways to trade crypto were reliable or safe.
The financial implications
While there is a political calculus to President Trump accepting bitcoin, there’s a strong financial incentive as well. Trump made between $100,000 and $1 million selling NFT trading cards in 2022. He also owns over $1 million in Ethereum, which could increase in value based on his own support of the industry. And crypto meme coins created by his fans, including the MAGA token, have surged in recent weeks, with investors buying in as a sort of proxy for their support of his campaign. Trump himself was gifted a treasure trove of the token, which is now worth over $4 million.
Trump’s embrace of crypto could also win him lobbying dollars: Crypto super PACs are poised to spend more than $80 million to influence the 2024 election.
But while some crypto enthusiasts have embraced Trump, others have responded more warily. “Trump has not shown any true commitment to crypto,” David Hoffman, co-host of the crypto podcast Bankless, wrote on Twitter. “So far, we are just another cow for him to milk.”
Andrew R. Chow’s book about crypto, Cryptomania, will be published in August and is available for preorder.