Crypto
GOP Embraces Cryptocurrency Revolution
Posted on Tuesday, August 13, 2024
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by Andrew Shirley
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0 Comments
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The Republican Party is quickly becoming a champion of cryptocurrency. That could be bad news for Democrats.
In the most recent development, Republican Senator Cynthia Lummis of Wyoming unveiled the “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024” – a.k.a., the BITCOIN Act. The bill appears to be the first legislative effort toward the U.S. government becoming an active holder of cryptocurrency.
Lummis’s bill would specifically require the federal government to purchase 200,000 units of Bitcoin over the course of five years, along with “affirm[ing] self-custody rights of private Bitcoin holders and emphasiz[ing] that the strategic Bitcoin reserve shall not infringe upon individual financial freedoms.” In a statement, Lummis described the bill as a “Louisiana Purchase moment that will help us reach the next financial frontier” and called on Congress to “take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve.”
Notably, the Bitcoin would be acquired by “diversifying existing funds within the Federal Reserve System and Treasury Department,” and not through any new taxes or deficit spending. If the United States indeed acquires one million Bitcoin, it would represent about five percent of the 21 million total Bitcoin units in circulation – roughly equivalent to the fraction of the world’s gold reserves held by the U.S. government.
The concept of a Bitcoin reserve has generated some buzz in recent years as cryptocurrency has continued to revolutionize the global financial system. Unlike government-owned currency, or “fiat money,” cryptocurrencies, of which Bitcoin is the most prominent, are typically issued and managed by decentralized networks of computers using blockchain technology.
This means that governments cannot control the supply of crypto – making them, in theory, a safe haven from inflationary policies like those that have rocked the U.S. economy over the past four years. The value of cryptocurrency is determined solely by supply and demand in the market, as well as the perceived utility and trust in the technology – something which could increase dramatically if the U.S. government begins purchasing Bitcoin.
As a relatively new issue (Bitcoin was just created in 2009) cryptocurrency has so far created some unlikely political rivalries and alliances, with Republicans and Democrats falling on both sides of questions surrounding the regulation and taxation of the technology. But former President Donald Trump, recognizing the potentially revolutionary nature of cryptocurrency to the future of the global economy, has charted a course that other Republicans are increasingly fallen in line behind.
That course includes making cryptocurrency an important part of his re-election agenda and promising to protect the independence of crypto markets from government interference.
In July, Trump spoke at Bitcoin 2024, a national cryptocurrency conference. Along with promising to build a “strategic national Bitcoin stockpile,” Trump pledged to fire Biden SEC Chairman Gary Gensler, who has been openly hostile toward the crypto industry, and to “keep 100 percent of all the Bitcoin the U.S. government currently holds or acquires.”
“If crypto is going to define the future, I want [it] to be mined, minted, and made in the U.S.A.,” Trump told Bitcoin enthusiasts in attendance. “If Bitcoin is going to the moon … I want America to be the nation that leads the way.”
Trump’s leadership on the issue appears to have helped him make inroads in the tech community – a constituency that Democrats have had a virtual monopoly on until very recently. Multiple mainstream publications noted that the Bitcoin conference was filled with attendees wearing pro-Trump clothing. Several individuals were wearing “Trump Save America” shirts, and scores of attendees were wearing the iconic red MAGA hat. A Bloomberg article derisively called it a “MAGA-filled Crypto lovefest.” According to The Verge, “hours before Trump was scheduled to speak, the lines filled out the door and around the block.”
A number of noteworthy tech business leaders have also recently offered their public support for Trump, listing his stance on crypto as one reason why. Late last month, tech billionaire David Marcus announced that he was endorsing Trump for the 2024 election, describing his political evolution from Democrat to Republican as a “gradual political 180” over several years. Marcus is notably the creator of the Libra cryptocurrency, which received significant backing from Facebook. “I believe we need a President who is unequivocally pro: America, the Constitution, business, Bitcoin/crypto, innovation, Israel, small government, legal immigration, free speech, meritocracy, and common sense,” Marcus stated.
The sudden surge of support for Trump among the crypto community has touched off an intra-party squabble within the Democrat Party. While the smart move from a political standpoint would clearly be for Democrats to mimic Trump’s approach and promise to empower the crypto industry by getting government out of the way, the left’s affinity for blanketing everything in layers of regulatory red tape is proving a difficult habit to break. Many Democrats, such as Senator Elizabeth Warren of Massachusetts, are urging Kamala Harris to take a tough stance on crypto regulation.
With so many other pressing issues facing the country this election cycle, crypto may not receive the same attention as the border or the economy. But for a certain number of Americans – including some wealthy and influential figures – it could be a deciding factor, and so far Trump appears to have the edge.
Andrew Shirley is a veteran speechwriter and AMAC Newsline columnist. His commentary can be found on X at @AA_Shirley.