--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
--:-- Jessica Mendoza: It's Wednesday, September 25th. Today, we're talking about how former President Donald Trump is making a play for the votes and money of the crypto industry. Would you like one? You want a hamburger? These burgers are killer. They really are. They're good. Save me a bite. But when Trump went to pay, he didn't pull out cash or a credit card. Instead, he brought out his phone. I'm just going to scan this QR code here with his phone. If you want to take that from him. Yes, go ahead. And paid with Bitcoin. All right, we're done. Perfect. Your first transaction by a president on the Bitcoin protocol. History. You know what that means? It's history. It's history of the mail.
--:-- Vicky Huang: The bar Trump was at is called PubKey, and it's a Bitcoin-themed bar. I guess if you just walk in, it looks like any other bar. But if you take a closer look, you would just be able to spot some of the things that crypto industry people would get immediately. Things like a framed buy Bitcoin sign hanging on one wall. And on another wall, a digital ticker that shows the current value of a single Bitcoin.
--:-- Jessica Mendoza: The day that Trump was there, the cramped bar had red hats lying around that said, make Bitcoin great again. Why was Trump there? This is part of his campaign activity. And this all just goes to his pivot to embrace Bitcoin and cryptocurrency.
--:-- Vicky Huang: Trump is definitely making a play for the votes and money of the crypto industry.
--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, September 25th. Coming up on the show, how Trump became this election's crypto candidate. Why shop at Burlington? Maybe it's the deals that are new each time you drop by. Maybe it's the brand names you'll be shocked Burlington has in store. Or maybe it's the quality of the items, the amazing selection, and the newest trends. If you like to save but also like to stay in style, Burlington is your answer. And the question you'll be asking yourself is, why go anywhere else? Burlington. Deals. Brands. Wow.
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--:-- Vicky Huang: The alliance between Trump and the crypto industry has been years in the making. And it's actually a little bit surprising. Not long ago, Trump was vocally not a crypto fan. Here's what he said a few years ago: "Bitcoin and digital assets were based on thin air and Bitcoin is a scam against the dollar. I don't like it because it's another currency competing against the dollar. Essentially, it's a currency competing against the dollar. I want the dollar to be the currency of the world. That's what I've always said."
--:-- Jessica Mendoza: So when did his view on crypto start to change? It appears that he first made the foray into crypto in 2022 when he launched his first collection of non-fungible tokens, which are basically crypto's version of digital trading cards.
--:-- Vicky Huang: At the time, a lot of celebrities were launching their own NFT collections. And after announcing he was running for president, Trump did the same. The first collection, a lot of it featured him as a superhero. I'm sure you guys have been looking at some of the other Trump cards. I like the ones with cowboy hats because...
--:-- Jessica Mendoza: And on this ex interview that he did recently he said that he didn't expect it to take off but the NFTs sold off really quickly. And he started noticing that a lot of people paid for the NFTs with crypto, not credit cards. And that kind of helped him take notice of cryptocurrencies.
--:-- Vicky Huang: As Trump was starting to warm up to crypto, the industry was facing a chilly reception from the federal government. So in the past couple of years, the crypto industry has really complained about one thing when it comes to being a crypto company in the United States, and that is the lack of regulatory clarity.
--:-- Jessica Mendoza: The tension is over who should be in charge of that regulation and what that regulation looks like. Under the Biden administration, the Securities and Exchange Commission, the SEC, has said that it should be the agency regulating cryptocurrencies.
--:-- Vicky Huang: As far back as 2021, Chairman Gary Gensler has called the industry a wild west that poses a lot of risk to investors. Under him, the SEC has sued some of the biggest crypto companies, alleging that they should be subject to SEC oversight.
--:-- Jessica Mendoza: Most crypto companies disagree, and they say that what's needed is an entirely new kind of regulator. It's a bit of a wonky debate, but it's a debate that really matters to the people who care about crypto.
--:-- Vicky Huang: So in the face of that pressure, and with the 2024 election coming up, crypto backers have taken on a new strategy. Last year, they started building themselves up as political players with deep pockets.
--:-- Jessica Mendoza: The industry responded to this crackdown by banding together two companies, Coinbase and Andreessen Horowitz, the venture capital firm, got together to build a new super PAC for the crypto industry. And the goal for this new super PAC was to raise $50 million for 2024's congressional elections and elect crypto-friendly policymakers.
--:-- Vicky Huang: And they quickly amassed hundreds of millions in donations. As of June, that super PAC, called Fair Shake, along with two others tied to crypto, had raised nearly $170 million.
--:-- Jessica Mendoza: So far, that money has gone towards lobbying for crypto's interests at the congressional level. One early race that Fair Shake was involved in was the Democratic primary for a U.S. Senate seat in California.
--:-- Vicky Huang: The Super PAC took out a multi-million dollar ad campaign against Representative Katie Porter, who'd been vocal about regulating the crypto industry. And she lost the primary after the Super PAC unleashed an ad campaign that claims that she took cash from big banks, big pharma, and big oil.
--:-- Jessica Mendoza: We don't know how much the ad campaign really affected her campaign, but she lost. Has this pool of money started trickling into the presidential election?
--:-- Vicky Huang: So this exact pool of money hasn't trickled into the presidential election. However, President Trump became the first major party candidate to accept campaign donations made in cryptocurrencies.
--:-- Jessica Mendoza: And he has received at least millions of such donations. According to Trump's campaign, those donations are worth $3 million.
--:-- Vicky Huang: And recently, he's been courting crypto enthusiasts more directly. In May this year, Trump invited some of the holders of his NFTs to Mar-a-Lago for a gathering.
--:-- Jessica Mendoza: And many of the people who bought these NFTs work in crypto or are very much involved in the crypto space. They went to that gathering and they established this connection with Trump.
--:-- Vicky Huang: Soon, big endorsements started pouring in. Among them were Tyler and Cameron Winklevoss, the founders of a crypto exchange called Gemini.
--:-- Jessica Mendoza: And another pair of powerful donors to Trump are Mark Andresen and Ben Horowitz, the co-founders of the venture capital firm Andresen Horowitz, which pretty much pioneered crypto investing in Silicon Valley.
--:-- Vicky Huang: They also said that they are supporting Trump for this presidential election and many other crypto leaders have also come out to say that they support Trump.
--:-- Jessica Mendoza: Just broadly speaking, what do these big crypto figures like about Trump?
--:-- Vicky Huang: One thing I've heard from a lot of the crypto industry executives that he is willing to meet with them and discuss the challenges and opportunities of the crypto industry.
--:-- Jessica Mendoza: For example, in June, Trump hosted this roundtable with some executives from the Bitcoin mining industry.
--:-- Vicky Huang: And he was talking to them about how he wants all of the remaining Bitcoin to be mined in the U.S. instead of other countries.
--:-- Jessica Mendoza: And some executives said that he asked intelligent questions and showed that he cared.
--:-- Vicky Huang: So that access and willingness to engage with them is one thing that some of the crypto industry executives have said that they like about him.
--:-- Jessica Mendoza: As the crypto industry and Trump have gotten closer, he started making some big promises on the campaign trail. That's next.
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--:-- Jessica Mendoza: In July, our colleague Vicky Huang was at a major Bitcoin conference in Nashville. And the keynote speaker was Trump.
--:-- Vicky Huang: Just the fact that he was going to that conference was a huge deal. Donald Trump is a hot ticket at Bitcoin 2024.
--:-- Jessica Mendoza: This Bitcoin conference is sort of an annual gathering for some of the biggest Bitcoin diehard fans.
--:-- Vicky Huang: And the fact that Trump was the keynote speaker of this conference got people very, very excited.
--:-- Jessica Mendoza: And I have to show you guys the line outside the Nakamoto stage here in Nashville, Tennessee. It's insane.
--:-- Vicky Huang: So there were a lot of people there. When Trump finally came onto the stage, there was a lot of excitement, a lot of claps.
--:-- Jessica Mendoza: Hello, Bitcoiners. Thank you very much. Hello. It's good to be with you. It's good to be with you.
--:-- Vicky Huang: And he talked about how he wanted to make the U.S. the crypto capital of the planet and how he has all these plans for the Bitcoin and crypto industry.
--:-- Jessica Mendoza: And he sort of laid them out throughout his 15-minute speech.
--:-- Vicky Huang: The conference was packed with both Bitcoin and Trump fanatics. And when he started talking, Trump told them exactly what they wanted to hear.
--:-- Jessica Mendoza: One of the promises he made is for the U.S. to create a national Bitcoin stockpile, which just means that for the U.S. to hold all of the Bitcoins that it currently has and not sell them.
--:-- Vicky Huang: A Bitcoin stockpile is something that a lot of people in crypto have been calling for. The idea is for the U.S. to buy up a chunk of Bitcoin and hold on to it.
--:-- Jessica Mendoza: Crypto backers say that would give the currency some legitimacy and also make its price less volatile.
--:-- Vicky Huang: And then the other plan is to set up a presidential advisory council for Bitcoin and crypto to sort of establish transparent regulation and set up a regulatory framework.
--:-- Jessica Mendoza: But the most popular promise at the conference was when he said that he would fire the SEC chair Gary Gensler on his first day back in the White House.
--:-- Vicky Huang: On day one I will fire Gary Gensler and appoint a new SEC chairman.
--:-- Jessica Mendoza: Did that surprise you that that was the one that got the most love from the crowd?
--:-- Vicky Huang: To be honest, that didn't surprise me. That definitely surprised him. I didn't know he was that unpopular.
--:-- Jessica Mendoza: Right now, much of the industry staunchly opposes Gensler because of the SEC's crackdown on crypto.
--:-- Vicky Huang: Gensler's current term as Biden's appointee to the SEC runs through 2026.
--:-- Jessica Mendoza: And there are legal questions around whether Trump could actually fire him if he became president.
--:-- Vicky Huang: While Trump has been busy courting the crypto industry, Vice President Kamala Harris hasn't focused on it.
--:-- Jessica Mendoza: She did comment on the currency for the first time this past weekend, saying at a fundraiser that she would, quote, encourage innovative technologies like AI and digital assets while protecting consumers and investors.
--:-- Vicky Huang: Meanwhile, Vicky says there are some skeptics who worry that Trump is making empty promises to the industry.
--:-- Jessica Mendoza: There have also been concerns around the former president's new crypto project with his two older sons.
--:-- Vicky Huang: The project is called World Liberty Financial, and we don't really know too many details about how the project would exactly work yet.
--:-- Jessica Mendoza: What we do know is that this project would have a token associated with it.
--:-- Vicky Huang: And this token will be sold and distributed to wealthy investors that meet certain net worth and income requirements.
--:-- Jessica Mendoza: Has there been any concern of conflict of interest with regards to this project if Trump is elected?
--:-- Vicky Huang: Yeah, there's a lot of concerns about conflict of interest if Trump is reelected in November.
--:-- Jessica Mendoza: And for example, if there's anyone who's trying to influence the president, if they were to buy the token, that would be a big concern because that would be seen as curry in favor with him.
--:-- Vicky Huang: And the other side of this is that much of the crypto industry is rallying behind Trump because they want to see him push friendlier regulations toward the industry.
--:-- Jessica Mendoza: And if he's involved in this crypto project, it would be sort of pushing friendlier regulations for an industry in which he has a business in.
--:-- Jessica Mendoza: The Trump campaign didn't respond to our requests for comment.
--:-- Vicky Huang: What does this alliance between Trump and the crypto industry tell us about where crypto is right now?
--:-- Jessica Mendoza: I think one thing that's very interesting is that crypto and Bitcoin specifically was created in the aftermath of the 2008 financial crisis as a way to sort of have this currency that's not under government control, that kind of symbolizes freedom and independence from government interference.
--:-- Vicky Huang: But now much of the industry wants to have a president supporting the industry.
--:-- Jessica Mendoza: So it seems a little bit ironic how things have turned out.
--:-- Vicky Huang: And so how important is this election to the crypto industry?
--:-- Jessica Mendoza: There are still so many ongoing lawsuits that the SEC has filed against a large number of crypto companies.
--:-- Vicky Huang: And some crypto companies have moved abroad because they said they could not operate in what they claim to be a hostile regulatory environment that is the U.S.
--:-- Jessica Mendoza: So the stakes are high for the crypto community.
--:-- Vicky Huang: And so, yeah, having a crypto-friendly administration in the White House would be a huge boon for this industry.
--:-- Jessica Mendoza: It would be if he keeps his promise.
--:-- Jessica Mendoza: That's all for today, Wednesday, September 25th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode from Ben Foldy, Alex Leary, and Caitlin Ostroff.
--:-- Vicky Huang: Thanks for listening. See you tomorrow.
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--:-- Jessica Mendoza: The Journal is a co-production of Spotify and The Wall Street Journal.
