Crypto in Politics: Will Bitcoin Decide the 2024 Election?

GM anon,

The US presidential elections are drawing close, and traditional issues such as foreign policy and cultural wars have dominated discussions. 

However, a new talking point has seemingly emerged that could have a major role to play in the country’s elections - Bitcoin (and crypto in general).

Let’s take a look at the rise of crypto in political discourse.

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Crypto and Politics

Just four years ago, the idea of presidential candidates discussing Bitcoin during campaign stops would have seemed far-fetched. However, the landscape began to shift dramatically during the primaries last year. 

Notable candidates like Ron DeSantis, Vivek Ramaswamy, and Robert F. Kennedy Jr. attended Bitcoin conferences, appeared on major Bitcoin podcasts, and integrated Bitcoin-focused planks into their campaign platforms.

The real turning point came when President Donald Trump notably departed from his previous stance. He had once disparaged Bitcoin as a threat to the U.S. dollar. However, he is now voicing a more accepting tone. Responding to what he described as the Biden administration's "heavy-handed actions" against the cryptocurrency sector, Trump declared his support for keeping the industry stateside. 

Plus, the Trump administration has also opened up its doors for crypto campaign donations.

The Current Environment 

The Biden administration's stringent approach to cryptocurrency regulation has sparked significant backlash from the industry and its supporters. Senator Elizabeth Warren’s crusade against crypto has been particularly intense, leading several major cryptocurrency firms to leave the U.S. in search of more favorable regulatory environments. This regulatory hostility could alienate a significant portion of American voters, especially as cryptocurrencies like Bitcoin gain mainstream acceptance.

Hayden Adams, founder and CEO of Uniswap, urged President Biden to reconsider his administration's approach to crypto, warning that current policies could drive voters away. In a May 12 post, Adams criticized the administration for allowing Senator Warren and the SEC to "wage total war" on crypto, suggesting Republicans are capitalizing on this stance and moving towards a more crypto-friendly position.

Since taking office, President Biden has signed an executive order on digital assets and nominated Gary Gensler as SEC chair. Under Gensler, the SEC has increased enforcement actions against crypto firms, leading to criticism for inconsistency. With major cases against firms like Kraken, Coinbase, Ripple, and Binance, the administration's stance has faced backlash from the crypto community, increasing pressure on Biden to adjust his policies before the upcoming election.

Voter Sentiment

Recent polls suggest that in key swing states, a notable number of voters now consider Bitcoin and cryptocurrency policy a major issue. This shift is further amplified by the actions of pro-Bitcoin and cryptocurrency Political Action Committees (PACs), which are investing millions into not only the presidential race but also Senate and House races. This level of investment and political engagement from the crypto community indicates a solidifying of its influence in U.S. politics.

With over 20% of Americans owning Bitcoin or other cryptocurrencies, the potential impact on the electoral landscape cannot be understated. President Trump's pivot to a pro-crypto stance could be seen as a strategic move to capture this growing demographic, especially in an election cycle characterized by tight polling numbers. 

Given that recent presidential elections have been decided by razor-thin margins, the crypto voter bloc could very well swing the outcome in 2024.

Voter Insights

The Harris Poll, on behalf of Grayscale, conducted a national survey called "2024 Election: The Role of Crypto." Here are some key insights.

Voter Concerns and Crypto

Inflation is the most pressing issue for American voters, who prioritize financial stability and the ability to pay bills over other values such as family, patriotism, and community engagement. This concern dovetails with the appeal of Bitcoin, often seen as a hedge against monetary debasement due to its hard-capped supply. Nearly half of the voters are waiting for clearer policies before investing in crypto, indicating a demand for regulatory clarity.

Youth and Crypto Adoption

Younger voters, particularly Gen Z and Millennials, show a distinct preference for crypto over traditional equities, with ownership rates of 31% and 35%, respectively, compared to 17% and 24% for equities. A significant majority of these younger demographics believe that "Crypto and blockchain technology are the future of finance," with 54% of Gen Z and 58% of Millennials expressing this view. 

Additionally, 68% of voters aged 18-34 would be more likely to invest in crypto if there were clearer regulations, underscoring the importance of regulatory clarity for wider adoption.

Bitcoin and Political Campaigning

The integration of Bitcoin into political campaigning highlights several key trends.

1. It emphasizes the increasing importance of digital literacy and understanding of technology among presidential candidates. As digital assets become more intertwined with the economy, candidates who can credibly speak to their potential benefits and challenges may gain an edge.

2. The political discourse around Bitcoin and cryptocurrencies may encourage greater regulatory clarity. As candidates outline their positions, they will need to address the industry's calls for clear, consistent, and fair regulations to foster innovation while protecting consumers. 

The Bipartisan Divide

While crypto has bipartisan support, it is clear that it receives more favorable treatment from Republicans. Politico reports that a critical vote — “the first time a full chamber of Congress has taken up a big crypto policy bill” — is essentially dead on arrival with a Democrat-controlled House and Senate. Meanwhile, the most vocal supporters of crypto in office today are Republicans, figures like Sens. Emmer and Cynthia Lummis.

Critics argue that political support for crypto often stems from financial interests rather than a moral crusade, but it is undeniable that crypto is an increasingly relevant political issue. For some, it is the defining issue of our times, representing not just an investment opportunity but a movement, a philosophy, and a way of life.

For many crypto supporters, the issue is existential; another four years of Biden means more regulation by enforcement, more gridlock preventing actual crypto legislation, and more anti-crypto rhetoric from the highest political office. During Biden’s tenure, U.S. legislators and regulators have become increasingly hostile to crypto, significantly impacting the global industry. 

Recently, restaking platform EigenLayer, touted as a major blockchain innovation, faced heavy criticism for a highly restrictive airdrop. Under the current regulatory regime, it was essentially EigenLayer’s only move unless it wanted to risk a U.S. Securities and Exchange Commission lawsuit.

Given this environment, it's understandable why figures like Ryan Selkis, Mike Dudas, and Mark Cuban believe the crypto industry must align itself with Republicans to achieve favorable policies. Critics might say former President Donald Trump’s recent support for crypto is opportunistic, aimed at painting Biden as out of touch. However, with the US crypto industry feeling under assault by the government, having a prominent figure like Trump willing to speak out in support is likely a welcome development.

The Potential Risks of Politicizing Crypto

Trump’s embrace of crypto carries potential risks. Digital asset markets have experienced dramatic booms and busts in recent years, and key industry players like Sam Bankman-Fried have been sentenced to prison for breaking the law. The shift also carries risk for Washington’s crypto lobby. Trump could make the politics of digital asset regulation even more partisan moving forward. The industry has spent years — as well as millions of dollars in campaign contributions — trying to build support in both parties, which will likely be key to enacting legislation that crypto firms want.

Conclusion

Fifteen years after Satoshi Nakamoto introduced Bitcoin, it has evolved from a novel digital asset into a significant political issue. As the US approaches one of the most closely watched presidential elections, the role of Bitcoin is not only a reflection of its growing economic significance but also a testament to its potential to influence policy at the national level. 

Whether Bitcoin becomes a decisive factor in the 2024 election remains to be seen, but what is clear is that the era of cryptocurrencies remaining on the political sidelines is decidedly over. As we move forward, the dialogue between policymakers, industry leaders, and the electorate will likely shape the trajectory of this digital revolution in ways we are only beginning to understand.

That wraps up today's insights! We hope you enjoyed today’s issue! Till next time anon.

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