Why Donald Trump Adopted Cryptography

DOnald Trump used to criticize cryptocurrencies, calling them “Disaster waiting to happen” It is saying that bitcoin looked like “a scam”. Now, he is promising to build a “crypto army.”

On Tuesday, the Trump campaign announced it would accept donations in cryptocurrencies, 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 upcoming elections. Others, however, he said which simply reeked of opportunism.

Here are the factors that led to Trump’s about-face on crypto.

Is encryption left or right?

When crypto broke 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 example, encryption described as a boon for free markets and privacy. Some Democrats, including Cory Booker, on the other hand, have emphasized how encryption could be a “democratizing” force and lead to greater financial access for people who have long been excluded from the traditional banking system.

For a time, 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 on “financial inclusion and equitable access”. But in reality, Bankman-Fried was secretly donating to both parties with the underlying goal of getting pro-cryptocurrency candidates. After the FTX Combustion, Some of the Democratic Politicians Bankman-Fried Embraced distanced themselves from the industry.

See more information: The bombshell evidence that led to Sam Bankman-Fried’s conviction

At the same time, several prominent Democrats went to war against encryption, arguing that it was predatory and posed a major risk to the American economy. Elizabeth Warren promised to build a “anti-crypto army” while Gary Gensler, chairman of the Securities and Exchange Commission and Biden appointee, has used his position to prosecute bad actors and crack down on the crypto industry in the states.

Warren and Gensler’s anti-cryptocurrency campaigns drew the ire of many cryptocurrency fans, who viewed the duo as an existential threat to their industry. On the other hand, right-wing candidates with pro-crypto stances, including Vivek Ramaswamy, have found friendly audiences in crypto conferences.

Given this broader climate, supporting crypto now allows Trump to place himself in direct opposition to Warren — and potentially galvanize support from an industry that distorts young people and men. The Trump campaign made this very clear in its statement on Tuesday, claiming that its acceptance of bitcoin donations was part of its opposition to “socialist government control” over US financial markets. “While Biden piles regulations and bureaucracy on all of us, President Trump is ready to embrace new technologies,” said the declaration to read.

A changed cryptographic landscape

President Trump is not the only politician to soften his opposition to encryption. Last week, many Democrats, including Chuck Schumer, broke with Warren and Gensler 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 conventional institutional investors) were rejected by a federal judge. Since that decision, bitcoin ETFs have surpassed hundreds of billions of dollars in volume of businessand a similar ETF for the cryptocurrency ether appears ready for approval also.

This week, the House of Representatives will vote on a Republican-led pro-cryptocurrency bill called the Financial Innovation and Technology for the 21st Century Act. A handful of Democrats recommended support to the account. And although the White House opposes the bill, it said in a declaration who was eager to work with Congress on legislation to promote “the responsible development of digital assets and payments innovation” in the U.S.

But the path to approval of this project in the Senate is unclear. And many ordinary Americans are wary of encryption: three-quarters of respondents in a 2023 Pew Study said they were not confident that current ways of trading crypto were reliable or secure.

The financial implications

While there is a political calculation for President Trump to accept bitcoin, there is also a strong financial incentive. Trump has made between $100,000 and $1 million selling NFT trading cards in 2021. He also owns more than $1 million worth of Ethereum, which could increase in value based on his own support for the industry. And meme cryptocurrencies created by his fans, including the MAGA token, have surged in recent weeks, with investors buying in as a proxy of sorts to support his campaign. Trump himself received a treasure of the token, which is now worth more than $4 million.

Trump’s embrace of crypto could also earn him lobbying dollars: Crypto super PACs are primed to spend more than US$80 million to influence the 2024 elections.

But while some crypto enthusiasts have embraced Trump, others have responded with more caution. “Trump has demonstrated no true commitment to cryptography,” David Hoffman, co-host of cryptography podcast No bank, wrote on Twitter. “So far, we’re just another cow for him to milk.”

Andrew R. Chow’s book on cryptography, Cryptomaniawill be published in August and is Available for pre-order.