Confused by the politics of crypto? Follow the Incentives

In recent months, crypto has come to play an increasingly prominent role in US politics, culminating in the recent Bitcoin 2024 conference in Nashville. The event featured speeches from various representatives of Congress, no fewer than ten senators and two presidential candidates – including former President Donald Trump, whose speech headlined the conference.

Like many other high-profile newcomers to the cryptosphere, including Blackrock’s Larry Fink and AmEx’s Steven Squeri, Trump’s current pro-crypto stance marks a sharp departure from his previous stance on the issue – he said famously not “a fan” of Bitcoin. , stating that the crypto was “responsible for illegal activities”.

It is uncertain whether Trump, or indeed the other names mentioned above, have thoroughly examined the technical aspects, monetary properties or potential future role of Bitcoin. What is clear, however, is that they all have strong incentives – either political or financial – to support crypto. These incentives may not always align with the ideological reasons many enthusiasts support bitcoin or cryptocurrency — reasons that may vary, but include transparency, freedom, sound money, decentralized financial opportunities, and more.

About 40% of US adults currently have a crypto wallet, of which 63% want to accumulate more crypto, according to a recent sentiment report from Security.org. This implies that there is a potentially significant number of votes to be won – or lost – based on a given candidate’s attitudes towards cryptocurrency. However, it’s not just votes on the table. The pro-crypto lobby has proven to be one of the wealthiest segments among political donors, further creating an incentive for candidates to put crypto on their ticket. Influential backers include the Winklevoss twins and Coinbase CEO Brian Armstrong, who have contributed donations totaling more than $75 million.

Who promises what?

The allure of funding and votes means it’s perhaps no surprise to see candidates from all sides of the political spectrum throwing their hat into the crypto ring. The Bitcoin conference provided a lot of information about the commitments of several political players. Key takeaways from Trump’s speech included promises to fire current SEC chairman Gary Gentler and appoint a new one — one who will agree with many of the industry executives who found themselves in a courtroom for to defend the last trial courtesy of Gensler and his team.

He also promised to create the US Government’s national strategic Bitcoin stockpile if elected, as well as create a crypto task force to come up with “common sense legislation” in the first 100 days and excluding a USD CBDC.

Although the odds of a presidential victory currently seem much less likely, Robert F. Kennedy also used his Bitcoin Conference platform to pledge to create a strategic US BTC reserve, with an additional commitment to purchase nearly 20% of Bitcoin available to maintain it. Eliminating BTC transaction taxes and classifying Bitcoin as property are among his other policy promises. Pro-crypto senator for Wyoming, Cynthia Lummis, also focused on introducing a strategic Bitcoin reserve, introducing a bill that would authorize the government to secure one million BTC.

Although she declined to attend the event, much to the chagrin of Crypto Twitter influencers, Kamala Harris seems reluctant to stay behind in the crypto political game. Even as several high-ranking Democrats, including famously anti-crypto senator Elizabeth Warren, have firmly established their policy positions against digital assets, Harris is meeting with industry supporters and Democratic donors, including Mark Cuban and Anthony Scaramucci, at an event in which the Democratic Leaders of the Senate will also present their case to the crypto community.

Precisely because of the financial and electoral incentives on the table, it is wise to approach the statements and promises of influential figures – especially those vying for political power – with healthy skepticism. Campaign promises may bear no resemblance to the reality of government policy—or what can be passed through Congress. Maintaining an objective stance—as much as possible during any highly polarized election—allows us to continually reassess how our own beliefs might be shaped by those who have the power to control the narratives—not just about Bitcoin, but a wide range of potentially life-changing problems.