What crypto wants from Trump
23:46 Share

In early December, my colleague, Chloe Cornish, decided to travel to Abu Dhabi to report on a crypto conference. So the conference was held in the Abu Dhabi Exhibition Center, but it was in the more glamorous part of the Exhibition Center. I would say it's the part that is next to the sea. There's a little harbor where there's yachts pulled up alongside it.

As Chloe walks up to the entrance, she takes in the spectacle. There's like a DJ outside and food trucks and things like that. It doesn't have the kind of same starchy people in suits and smart shoes feel that you get at maybe Abu Dhabi Finance Week, for example. There are a couple of people wearing kooky outfits. Like I saw one guy wearing a suit that was completely covered in Bitcoin symbols.

Chloe's been to several crypto conferences around the world, but this one is of particular interest because it's taking place just weeks after Donald Trump wins the presidential election in the United States. And inside the exhibition center, Trump's son Eric is scheduled to give a speech about crypto that afternoon. We were interested in understanding how much energy the crypto community had received

if you like, from the election of President Trump, who has been elected almost on like a crypto ticket. President-elect Trump has said he's going to be very friendly towards cryptocurrency. So I was hoping to talk to people about how they feel about Trump becoming president. Chloe wanders around outside the entrance. It's loud and electronic music is thumping.

And there, she meets a 26-year-old guy named Didi Steiner. He's from Austria, and he catches her attention because he's sporting some unique crypto-themed apparel.

You're wearing a red hat that says, make Bitcoin great again. What do you think that Trump will do for the crypto industry? Like what concrete steps do you think he's going to take? Yeah, I think the regulatory framework will be very positive for Bitcoin. Bitcoin itself, it's great already. It's just like...

maybe banks, maybe family offices, pension funds and whatever will get like more clarity about Bitcoin. They will have more safety investing into Bitcoin. And also the Bitcoin mining will be probably...

moving into the USA and altogether it will be a great trust, a high-end implementing Bitcoin into the financial world. He'd lost loads of money to scamsters when he was early investing in cryptocurrency.

But because the industry has been through so much turbulence, I'd have to say that cryptocurrency enthusiasts have very strong stomachs, right? Like they have this macro belief that they've made the right call and that their bet will be borne out in the end. And it might take time. So they're enjoying the euphoria of Bitcoin being pretty high at the moment. Cool.

Chloe talks to plenty of other conference attendees who are sharing similar thoughts to Didi. What stands out to Chloe is that they're all banking on this idea that President-elect Donald Trump will be a godsend for their industry. I talked to all sorts of people and they were uniformly excited about the idea of a Trump presidency. They bet on him and he won. And

That's a big thing for an industry that's been seen as pretty fringe, right? And now their guy has become president of the United States. That's like a huge moment of vindication for you if you've been huddling, as the term is, for years. So as Trump prepares to move back into the White House in a few weeks, crypto's biggest enthusiasts are hoping that the industry's golden age could be on its way.

I'm Michaela Tendera from the Financial Times. Today on Behind the Money. It's clear that many in the crypto community believe the second Trump administration is going to be good for business. But what exactly do they want? And what are the risks if they get it? So we heard from Chloe Cornish, who's the FT's Gulf business correspondent, and was on the ground talking with crypto's big believers in the UAE.

But I'm now joined by the FT's London-based digital markets correspondent, Niku Asghari. She's been reporting on Trump and crypto alongside our colleague, Chloe. Hey, Niku. Welcome to the show. Thank you for having me. Over the last few years, crypto's been on a roller coaster. So let's run it back a bit. Remind me of some of the highs and lows here. And how would you just describe the overall vibe in the industry?

Yeah, it's been a pretty bumpy, pretty wild ride. I mean, in 2021 and 2022, the price of Bitcoin and other crypto tokens was rising. There was a lot of exuberance. And then FTX collapsed. This was the big crypto exchange run by Sam Bankman Freed. And it

It collapsed in late 2022. And that was a huge blow for crypto. It had ripple effects. A bunch of other companies collapsed. And in the years since then, the US and the Securities and Exchange Commission in particular have really clamped down and gone after crypto companies aggressively. Think of exchanges like Coinbase, Kraken, Crypto.com, Ripple. These companies have all been

sued by the SEC and in a lot of cases countersued as well. And the vibes, as you asked, have been very bad, very bad for a long number of years in the U.S. But then, around the middle of last year, something starts to shift in crypto's favor to lift it out of its depths.

And a lot of that comes from U.S. presidential candidate Donald Trump. The United States will be the crypto capital of the planet and the Bitcoin superpower of the world. And we'll get it done.

If crypto is going to define the future, I want to be mined, minted and made in the USA. It's going to be. So on the campaign trail, Trump really embraced crypto and in turn, crypto really embraced him. I mean, he showed up in July to one of the biggest Bitcoin conferences in Nashville and was just saying things like he wants to make the US the crypto superpower of the world.

On day one, I will fire Gary Gensler and appoint a new SEC chairman. I didn't know he was that unpopular. He is just so incredibly pro-crypto. I mean, he launched, he even launched his own crypto company alongside his sons and a few business partners. Trump and his sons started promoting this company called World Liberty Financial. It officially launched about a month before the election.

It's a decentralized finance platform in which people can buy a token. But unlike Bitcoin or other normal crypto tokens, you can't sell it. You can't trade it. You can just use it to sort of vote on proposals and on how to govern the platform. But I can't honestly tell you what that really means and what benefit that has to a person who's holding one of these tokens.

So how would you describe the way the crypto community responds to Trump's messaging on the campaign trail? I mean, he got donations from loads of big names in crypto. For example, Cameron and Tyler Winklevoss, the twins who famously fought Mark Zuckerberg over the founding of Facebook. They donated to Trump. They met him on the campaign trail.

Mark Andreessen and Ben Horowitz, they donated to Trump's campaign as well. And then you also had companies like Coinbase, like Ripple, who donated to Fairshake, this big super PAC that was created to support pro-crypto candidates across the US. And just this groundswell of both vocal support for Trump and for candidates who are pro-crypto, as well as the big financial backing that the industry gave to him. It all, I guess, culminated in helping him win the election. Yeah.

Yeah. And just to add, I believe the crypto lobby poured more than $100 million into the 2024 U.S. elections. So that's a lot of money. So describe to me what was the reaction among the crypto industry when Trump won?

Absolutely euphoric, just jubilant and elated and all of the synonyms for that. The price of Bitcoin goes up and up and keeps going up. And about a month after the election, it crossed $100,000 for one Bitcoin, which was a complete landmark momentous moment. I mean, as well as the price of Bitcoin and other crypto tokens going up.

The industry and top executives are just delighted at the idea that now under Trump, who's been so pro-crypto on the campaign trail, and he's also now nominated lots of pro-crypto people to various top jobs in Washington, that all of these lawsuits and all of this animosity from regulators in the previous administration is going to go away and the industry is going to be celebrated and supported in a way that it hasn't been before.

Now, I got to say, I don't really remember much about Trump supporting crypto back during his first term. Was it there and I just missed it? Or what was his view on it during his first term? In his first administration, he called crypto a scam. And this now, this embrace, this showing up at crypto conferences and saying the U.S. is going to be the crypto capital of the world, it's a huge change from his position then.

So why is he such a fan now, I guess, besides this personal connection he has to the company you mentioned, World Liberty Financial? At its essence, Bitcoin was founded to be anti-establishment, anti-Wall Street, and to do things a different way. And I think

At least part of Trump's support and embrace of it now comes from the fact that he's talked about being, him and his sons have talked about being debunked, about being sort of anti-establishment and we're going to do things differently now.

And this sort of marries and ties up with the ethos of crypto, which I think in large part is why he's embraced it so much. Yeah, you're right. That's one of the points his son Eric seemed to be making back at the Bitcoin conference that Chloe went to in December. So the attacks on the family, the attacks on our company, the nastiness of the system. Guys, they made our life miserable.

Had it not been for those attacks, I don't think my eyes would have been as open to the crypto industry as they've become. And by the way, I saw you guys go through those same attacks every single day. I saw them come after you. I saw them strip your bank accounts. I saw them cancel you like crazy. The same thing that they were doing to us.

So, Niku, you mentioned that President-elect Trump has been nominating a lot of pro-crypto people to top jobs in Washington. Tell me more about them. Yeah, there's lots of them, but maybe a few of the key ones. I mean, the SEC, as we spoke about earlier, with all the lawsuits that it's launched against the industry, has been sort of enemy number one and

The new head of the SEC that Trump has nominated is Paul Atkins. He used to work at the SEC before. He also sits on the advisory board of a crypto company, Securitize, and a crypto lobby group.

And there is just a broad sense that he understands crypto. He will make rules and he won't be so adversarial like Gary Gensler. Alongside him, you've got Howard Lutnick, who is in charge of Cantor Fitzgerald, this big Wall Street financial services group that is the bank of Tether, the biggest stablecoin operator in the world. And he is very pro stablecoins, very pro crypto. And he is now the commerce secretary in Trump's cabinet.

You've also got David Sachs, a venture capitalist who's invested in lots of crypto companies. And he's been appointed as the new crypto and AI czar who's going to be giving advice, I guess, to Trump and to others in the cabinet around creating crypto and AI policy. And of course, there's Elon Musk, who has become one of Trump's closest confidants and has for years been a crypto advocate. Even Tesla, his company, holds Bitcoin now.

These nominations and a few others have made crypto executives very happy because there's a sense that all these people understand crypto, invest in crypto, and they're not coming from this space of animosity. And instead, they're going to make rules or change things for the better.

Okay, so now it's January. Trump will be in office in a few weeks and he's putting together this group of people who are going to be supporting crypto, carrying out policy that will support crypto. But what does the crypto sector want from Trump? What are they really asking for now that they've poured all this money into his campaign?

A lot of this boils down to what someone I spoke to from the Brookings Institution said to me, which was that crypto wants greater legitimacy but light regulation. They want to be embraced and they want to be accepted like traditional assets, but it would be fine also if they weren't really scrutinized and they weren't really overseen in the same way that they have been over the past few years. So this idea of greater legitimacy but lighter regulation, right?

What tangible things does crypto want that would make that a reality?

Top of the list is a friendlier SEC. I can't overstate how much the crypto industry hated Gary Gensler, hated the lawsuits that he filed against them. I mean, when he announced that he'd resigned, they were all cheering, celebrating. Jesse Powell, the co-founder of the exchange Kraken, wrote on X that Gensler is a clown and a treasonous terrorist, which is just crazy language and underscores how hated he really was.

So having a friendlier SEC, having Paul Atkins potentially at the helm of that is really top of the list and to stop these lawsuits against these companies is,

Alongside that, crypto wants Wall Street banks, asset managers, the types of names that people will typically have heard of to be able to get more involved in crypto, to be able to trade, to be able to hold. All of these things that at the moment they're not really doing, they're sitting on the sidelines because, again, they've been worried about regulators going after them. There's a rule, for example, called SAB 121.

which is just a boring accounting rule. But it means that a lot of banks and asset managers have been put off from holding crypto on their balance sheets. And the industry wants to get rid of that rule in the hopes that it will entice big banks, big asset managers to properly get involved in crypto, pour billions of dollars into it. Right. So when I was talking with Chloe about her experience at the Bitcoin conference in Abu Dhabi,

She told me how one thing that really stood out to her from her interviews was this idea that Trump has said he wants to create a strategic Bitcoin stockpile. So first off, what does that mean? And second, how likely is that to happen?

Yeah, so the idea of a strategic Bitcoin reserve is for the US to use all of the Bitcoin that it has taken from scams and from frauds that it holds and to use that perhaps in the treasury as a sort of reserve asset.

So a lot of crypto advocates are really excited about this because they say that it will mean the US government will be buying more Bitcoin to add to its reserve, which will likely only push the price of Bitcoin even higher. But on the other hand, crypto skeptics argue that the whole point of having this as a reserve asset will only really benefit people who hold Bitcoin in the first place. As far as how likely it is for this to happen, that is pretty unclear at the moment. There are a lot of logistical questions that remain to my mind unanswered, like which

part of the U.S. government will be doing the buying. How will they be doing this? You know, where will the money come from to purchase the Bitcoin? These are these are sort of key questions that there doesn't seem to be answers for at the moment. Now, one of the big points of discussion in crypto over the last few years in the U.S. is this question of is crypto a security or a commodity? So where do you feel like that's going to go during Trump's second term?

Yeah, a lot of the point of contention in the US over the past few years, a lot of the reason these lawsuits have been filed is around the definition of what a crypto token is, whether it's a security or a commodity. And this is a very US specific issue. The UK, Europe doesn't have these security or commodity definitions, for example.

So the crypto industry is looking for clarity, likely from the SEC, perhaps even from the courts, to say these specific tokens, whether it's Bitcoin, Ethereum, Dogecoin, you name it, they want a list of tokens and their status as to whether this is a security or whether it's a commodity. And in an ideal world, the crypto industry wants crypto to not be called a security and therefore not have to abide by securities rules that govern things like stocks and bonds.

That's a really key element of what they want to be achieved. Coming up, the crypto industry might want to be careful about what it wishes for. Joining the mainstream financial system doesn't come without risks. So we're in kind of a wait-and-see moment. Will crypto get what it wants from the Trump administration? Will it become a key part of the mainstream financial system?

These things remain to be seen. But Niku, if these do happen, are there any pitfalls to consider? What should we be thinking about here? I think if crypto does become more mainstream, as the industry wants, if it becomes more entwined with traditional finance, with Wall Street banks and fund managers and pension funds and hedge funds...

it'll play a larger role in the financial system. So then if something happens that triggers a crash, a drop in the price of Bitcoin and other tokens, I think it'll have a much larger impact on the financial system as a whole and the ripple effects will be much bigger. If we cast our minds back to when FTX collapsed and the price of Bitcoin dropped to about $16,000,

That was detrimental. That was huge. It was a big moment for crypto. But the people that were really mostly hurt in that were the retail investors who were trading on the FTX exchange. There was no real impact on traditional finance. This time round, that could change. I mean, pension funds have started investing in crypto, but very, very small and only, I think, two or three of them.

And while it is a risk, it's still it's very, very far away from where we are at the moment. I should also add that the financial stability risks potentially posed by crypto are top of mind for some policymakers. The European Central Bank and the International Monetary Fund are both looking into this question of what systemic risk crypto poses to the wider financial system. And they're calling for stronger policy measures. Okay. Okay.

So another thing I'm wondering about, you know, over the years, we've seen crypto be used for more nefarious purposes. There have been examples of things like money laundering. So if the crypto industry is seeking this greater legitimacy, but also less scrutiny, doesn't the industry need to be focused on cleaning up their act even more?

Yes, absolutely. The industry needs to be focused on cleaning up their act even more, on stopping these money laundering and money flows to terrorist organizations and all the rest of it. But I guess in this era under Trump of lighter scrutiny, there is a question, I guess, of how seriously that's all taken. Now...

Changing gears a bit, we know that Trump has expressed his support for crypto, but he also has a lot of other plans on his economic agenda, too. You know, I'm thinking about his wanting to implement tariffs, things like that.

Could any of those actions end up impacting crypto inadvertently? Yeah, absolutely. Let's not forget that Trump is quite a wild card. And he's already said that he wants to slap huge tariffs on trade from Mexico and from China. And I was talking to the head of a big U.S. Bitcoin mining company who said that this will be really detrimental for them because they bring a lot of the equipment that they use to build and to expand their crypto mining facilities from Mexico and from China.

And so he was quite wary of what this will mean and whether Trump will, in fact, be good for his business and his part of the crypto industry. So big picture, what does it mean for the crypto industry now that, you know, many of its leaders have expressed that they want it to be more mainstream? Isn't that clashing with its original ideals that crypto was founded on?

Yeah, there's a huge, huge irony in it, I think. It was born out of this idea of being anti-establishment, anti-government. And yet here we are talking about the price of Bitcoin trading above $100,000 because arguably the biggest establishment of them all, the US government, is backing crypto. It goes completely against, I guess, the founding idea and the founding ethos of crypto.

What will you be looking for just as you continue to cover this space on your beat in the next months and year? I'll be looking for any sign that crypto is becoming more mainstream and more involved with traditional finance on a really big scale. Any sign that the banks, the pension funds, the big endowments are getting into crypto and what exactly they're doing.

The really big thing would be a really big bank, for example, openly and actively trading crypto. I think these will be really interesting developments to watch for. Niku, thanks for being here. Thank you so much. Behind the Money is hosted by me, Michaela Tendera. Safia Ahmed is our producer. Sound design and mixing by Joseph Salcedo and Sam Giovinko. Original music is by Hannes Braun. Special thanks to Dan Stewart. Topher Forges is our executive producer.

Cheryl Brumley is the global head of audio. Thanks for listening. See you next week.

Do you have an oddly specific sleep problem? You're in luck. The oddly specific sleep problem sale is happening now at Mattress Warehouse. Whether you're a sarcastic sleep talker or the even rarer sleep giggler, enjoy a one-year price guarantee on a huge selection of brands you can trust. Worry about the things you say, not the price you pay with 0% interest financing. So where would you look to find the perfect mattress? In a little mattress store or Mattress Warehouse? Visit mattresswarehouse.com.