How to listen to presidential candidates talking crypto
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Illustration: Sarah Grillo/Axios
Next week's presidential debate may be President Biden's last chance to win over some of the single-issue voters with cryptocurrency on their minds.
Why it matters: Much to everyone's surprise, both candidates for U.S. president appear to be taking the topic of cryptocurrency seriously as an election issue, but only the challenger has made clear statements about the topic from the stump.
State of play: Former President Trump is embracing digital assets. While the Biden administration has thus far been seen as hostile.
- Donald Trump has flip-flopped from his position when he was in the White House, when he tweeted that he was "not a fan of Bitcoin."
- The Biden administration's position on the industry has been viewed as following the lead of Sen. Elizabeth Warren (D-Mass.).
Yes, but: There's been signs of softening. One source told Axios that rumors of Biden's political team reaching out to major players in the space is real, and major Democrats are reported to have been taking high-level meetings with the industry.
- Plus, there's a reported summit between major legislative and cryptocurrency leaders in the works for July, and the White House has an invite.
Between the lines: Trump's made some money off of non-fungible tokens, known more commonly as NFTs, and he sees Bitcoin mining as an industry Americans can excel at.
- Look for the former president to make strong statements about the industry's potential to advance the American economy at next week's debate.
- Look also for him to use the issue to draw a contrast between the two leaders, as one who wants to make business work better and another that gets in the way of entrepreneurs.
Friction point: Biden's problem is that, while many Americans dislike crypto, that's unlikely to decide those voters' votes. However, there definitely are at least some people for whom growing that asset class is their main concern.
- But Biden could undercut Trump if he finds something about the industry that he actually likes, and says so.
- So far the administration has only talked about it in two ways at once.
- The Biden executive order of 2022 has been the template: tepid language on the positive side ("responsible financial innovation"), but unreserved language on the negative ("strong steps to reduce the risks").
My thought bubble: Biden is likely better off changing the subject on stage next week rather than making noncommittal statements about working with the industry or fostering inclusion and innovation. He needs to get specific.
Zoom in: There are a few issues that Biden could pick up that are broadly popular, and that might throw Trump off his game:
- Bitcoin mining. It's an industry that the United States could clearly win if it chose to. While the environmental concerns are salient, they can be mitigated if the nation decides it wants to lead the right way.
- Stablecoins. These instruments have been the most successful, most widely used single application of distributed ledgers. Added bonus: Everyone who uses them prefers the ones that lean on the U.S. dollar.
- Ether's status. Biden's SEC chair won't say whether or not Ethereum's coin is a security, an issue with massive and widespread implications. The chair of the U.S. commodities regulator, the CFTC, and many, many others have said they don't think it is. Biden could take a side on the question and that would turn heads.
What we're watching: Those who have talked to Trump's people tell Axios that the sophistication there with regard to cryptocurrency has sharpened quickly.
- Watch for Trump to bring the topic up next week if the moderators opt not to do so, most likely by accusing Biden of being overly hostile to the industry.
- Trump is likely betting that Biden will, at worst, stumble in response or, at best, equivocate in a way that turns off pro-crypto voters.
Yes, but: It could backfire.
- A decisive statement from Biden either way — even a blanket condemnation of Bitcoin and its ilk — might have the effect of neutralizing any gains Trump's shift has earned him.
The bottom line: Biden is the one to watch at the debate. If he makes politician-like non-statements about cryptocurrency, then nothing has changed.
- But if he offers a true olive branch — without qualifying it — it's likely to make crypto's very well-resourced leaders second-guess their newfound fervor for Trump. If Biden goes the other way, it will clear up any doubt from the anti-crypto electorate about where he stands.
