Unlikely bedfellows - The GOP, Trump, Vance and the realignment of cryptopolitics

One of the oddities of the crypto roller coaster that began in 2010 has been its quick metamorphosis into a useful plank for the libertarian and (now) the right-leaning wing of US politics. Not really a surprise; crypto (and more narrowly, bitcoin) was developed to separate money from the state. It gave a finger to the nanny state, the favourite whipping boy (er, girl) of the right.  

Given the GOP’s long-standing distaste for big government, this is a convenient friendship. It’s a little disquieting though. I had naively assumed that crypto was a clever technology which did not have to wear blue or red.  

Most of the GOP was solidly anti-crypto until recently, when a couple of things changed. The first was the exponential growth of the technology to the point that about 500 million people across the world have downloaded wallets and bought one cryptocurrency or another. Some bought crypto just for fun, others to gamble, still others to escape their plummeting national currencies, but most are people who just want to save and spend privately, without their transactions being monitored. 

In the US the number of crypto wallet holders is about 40 to 50 million people. Somebody presumably whispered that number into Trump’s ear, no doubt telling him that it would be a good idea to promise this interest group some goodies, like relaxed regulations. Notwithstanding that Trump called bitcoin “a scam against the dollar” in 2021, he has now transformed into a full-throated crypto praise singer. 

To be clear, I don’t think that Trump understands crypto at all. He said recently that he does not want to let “another country take over” bitcoin dominance, which is a dead giveaway for alarming ignorance about how the tech works. (Bitcoin is nationless and borderless — that’s sort of the point.) Trump’s minions are also successfully selling NFTs of various Trumpy merch, which has probably also prompted his affection for the whole crypto sector.  

Then there is his rant at the Libertarian National Convention in May: “I will also stop Joe Biden’s crusade to crush crypto, we’re going to stop it. I will ensure that the future of crypto and the future of bitcoin will be made in the USA, not driven overseas. I will support the right to self-custody to the nation’s 50 million crypto holders. I say this with your vote. I will keep Elizabeth Warren and her goons away from your bitcoin, and I will never allow the creation of a central bank digital currency.” 

I am pretty sure that, if Biden and the Blues supported crypto, he would have gone the other way. You know what a kidder he is.  

And now there is JD Vance, Trump’s recently chosen running mate, who is not only tech-savvy but has disclosed that, as of December 2022, he owned a whack of bitcoin (somewhere between $100K and $250K). Anyone who has owned crypto for a few years is not a speculator, but a holder (called a Hodler in crypto-speak). That checks the long-term crypto supporter box and Vance is vocal in his support. There is also a pretty good chance he understands how it works and why it is important — he was a Silicon Valley venture capitalist for a while. 

As an aside, there is a darker conspiratorial narrative when it comes to Vance, perhaps the subject of another column. Vance was mentored (and made rich) by the right-wing billionaire Peter Thiel, co-founder of PayPal and Palantir Technologies. He is well known in tech-billionaire circles, even to those who have reliably leaned left. There has been a shift in those too.  

Recently, Marc Andreessen and Ben Horowitz of Andreessen Horowitz, one of the most successful tech investors in the world, have, to everyone’s surprise, come out in support of the Trump/Vance ticket. (Horowitz recently quipped that his mother is barely talking to him because of his political switch.) Andreessen Horowitz is deeply invested in crypto projects. Quiet rumours have been heard — could the new administration declare bitcoin a national reserve asset? If this were to happen, the wealth created among this elite would be incalculable. I dunno, I hate conspiracy theories, but this has a tiny ring of “maybe”. 

There may well be another, more fundamental, reason for these Damascene conversions and newly evangelical support for crypto. Pandering to a citizen interest group is obviously a good idea but, at its core, the business of elections is fuelled by hard cash — including donations from voters and corporations. The political-financial complex in the US is a daunting and arcane machine fought over by lobbyists, PACs (Political Action Committees), CEOs, institutions and opportunists, with deals concluded quietly over expensive whiskies behind closed doors.  

The crypto industry is now FU-rich after 12 years of dizzying price appreciation. While the industry paid little attention to politicians in the early years (on the contrary, politicians were generally treated with little more than disdain), it has now matured somewhat and started disbursing largesse to those with the power to influence regulation. Already $170-million has been amassed in pro-crypto PACs with names like FairShake, Defend American Jobs and Protect Progress. Pro-crypto political candidates and those hoping to keep their positions are now lining up with their begging bowls.  

Because of Trump and Vance, most of those receiving alms will be GOPers falling meekly into line, no matter their previous opinions about crypto. That is a pity, because there is also an increasing acceptance of crypto’s myriad benefits by Democratic candidates. Unfortunately, Biden recently vetoed a piece of bipartisan pro-crypto legislation that would have allowed banks to hold crypto on their balance sheets, so we can be sure that the $170-million is not going to find its way to many blue congressmen anytime soon.  

Given the crypto stakes ($2.6-trillion in markets currently, and perhaps orders of magnitude more than that in the future), there is much at stake for politicians with regard to these squealing blockchain-borne flora and fauna.  

Unlikely bedfellows will surely emerge. For the moment, Trump and Vance have stolen a march on the Democrats. DM  

Steven Boykey Sidley is a professor of practice at JBS, University of Johannesburg. His new book It’s Mine: How the Crypto Industry is Redefining Ownership is published by Maverick451 in SA and Legend Times Group in UK/EU, and is available now.