(Bloomberg) — In 2019, former President Donald Trump proclaimed he was not a fan of cryptocurrencies because their values are based on “thin air” and they can facilitate drug trafficking and other crimes.

What a difference five years, millions of dollars in donations and another tight presidential race can make. With elections less than four months away, crypto lobbyists have scored the backing of the soon-to-be Republican nominee just as supporters hope Trump’s political fortunes are on the upswing after he survived an assassination attempt on July 13. 

And the industry’s wish list for a potential second Trump term is coming into focus: At the top is a more hands-off approach from regulators, who cracked down on crypto companies under President Joe Biden following the collapse of the FTX exchange and a long list of other scandals, bankruptcies and criminal cases.

“In a Trump administration, you are not going to see bank regulators forcing banks to close bank accounts of crypto companies,” said Brian Morgenstern, head of public policy at crypto miner Riot Platforms Inc., who worked in the White House and the Treasury during Trump’s administration. “He would not use the Energy Department to single out Bitcoin miners.”

The nitty-gritty details of Trump’s crypto policies haven’t yet been ironed out. But based on his public remarks — echoed by the platform of the Republican National Convention — some potential winners and losers are emerging. Trump has pledged to promote Bitcoin mining in the US, protect self-custody of cryptocurrencies and prevent the Federal Reserve from issuing a central-bank digital currency that would compete with the industry. The former president wants the country to lead the nation in developing new technology, Brian Hughes, a senior adviser for the campaign, said in a statement.

“Crypto innovators and others in the technology sector are under attack from Biden and Democrats,” Hughes said. “While Biden stifles innovation with more regulation and higher taxes, President Trump is ready to encourage American leadership in this and other emerging technologies.”

Bitcoin Speech

More details on Trump’s plans may come during this week’s Republican convention, and Trump’s speech at the Bitcoin 2024 conference on July 27. Trump’s former opponent in the Republican primaries, the entrepreneur Vivek Ramaswamy, said he has had discussions with Trump about what crypto policy should look like, echoing a common refrain in the crypto world that regulations governing the industry need to be clarified — despite numerous enforcement actions laying out the government’s stance. 

“People ought to know what the actual rules are that they’re supposed to operate within,” Ramaswamy said in an interview. “You might disagree on the rules, but you shouldn’t disagree on the principle of whether people should know what the rules actually are.”

Ramaswamy’s is far from the only voice counseling Trump on crypto. His pick for vice president, Republican Senator J.D. Vance of Ohio, has long been a crypto advocate. The former president has also had conversations with Tesla Inc. CEO Elon Musk on the issue. 

Trump held court with buyers of Trump-themed digital trading cards at his Mar-a-Lago Club in May, and hosted Bitcoin miners there last month. Trump and several policy advisers as well as Republican Senator Bill Hagerty of Tennessee met with executives from about eight crypto miners, including Marathon Digital Holdings, CleanSpark Inc. and Riot. CBDCs, competition between US and China and miners’ ability to adjust to the needs of the energy grid were among topics discussed, said Jayson Browder, senior vice president of government affairs at Marathon. The same week they met with Trump, several of the largest miners backed Bitcoin Voter Project, a pro-crypto effort to influence voters.

Some right-wing think tanks such as the Heritage Foundation and Trump’s Republican allies in Congress have also become more vocal about the issue. 

‘Shared Vision’

“I’ve spent a good deal of time with the president talking about this industry and what we see, and I think a shared vision came through in our Republican platform,” Senator Hagerty said on Bloomberg Balance of Power on July 10, adding that he sees crypto as a “defining issue” in the election. “We have innovative DNA here that goes beyond any other nation. We should capitalize on that.”

The turnaround in Trump’s stance on crypto arose from a confluence of factors, including the growing political and fundraising appeal of the industry, according to close allies, campaign advisers and crypto executives who have discussed the issue with Trump. It was a natural result of contact with people in his orbit who shared a wealth of knowledge on the topic, his campaign confirmed. 

Donations from the likes of Cameron and Tyler Winklevoss, the billionaire twin brothers who founded the Gemini crypto exchange, soon followed his change of heart. 

‘Wedge Issue’

Yet the crypto industry is hoping Trump’s embrace of digital assets will resonate with voters beyond just deep-pocketed donors. A recent poll by crypto venture-capital firm Paradigm found that 28% of Republicans have invested in, traded or used crypto, and 13% of Republicans who were not planning to vote for Trump say his new pro-crypto stance may change their views. Many crypto investors are under the age of 40 — a demographic that presidential candidates always want on their side. 

“Trump is seeing this divide and he is using it as a wedge issue,” said Marathon’s Browder, who was in a recent meeting with Trump. “Politically it makes sense: We believe that these constituents will vote.”

Indeed, even the Biden administration has opened its doors to the crypto industry ahead of an election that could ultimately be decided by a relatively small number of voters in swing states. Last week, about 30 crypto insiders including Ripple CEO Brad Garlinghouse and Coinbase Global Inc. Chief Legal Officer Paul Grewal met with a White House adviser to talk about their frustrations and ask for specific changes to policies. Coinbase has said it is apolitical and instead is advocating for pro-crypto candidates in both parties while pushing to get anti-crypto candidates out of office through its support of the Fairshake SuperPAC.

Of course, all the donations and attention are being fueled by a notorious boom-and-bust asset class in the middle of a boom phase. Many of the crypto companies that survived the last bear market are now prospering, as Bitcoin trades near a March all-time high reached in the wake of the January launch of exchange-traded funds that invest directly in the original cryptocurrency. Coinbase’s shares are up about 40% year to date, while MicroStrategy Inc. — the world’s biggest corporate holder of Bitcoin — has seen its stock price more than double.

Yet many crypto businesses’ fortunes — and, in some cases, survival — are threatened by ongoing government lawsuits and other regulatory crackdowns. Enforcement actions and inquiries, particularly from the Securities and Exchange Commission, have touched nearly every major crypto company — from Coinbase, the biggest US exchange, on down to decentralized exchange Uniswap. Meanwhile, banking regulators have made it harder for crypto businesses to open and maintain accounts.

Other companies such as miners, whose machines support the functioning of crypto ledgers, have their own grievances with the Biden administration, including, for example, a proposed excise tax on mining. 

Industry insiders hope a new administration could make many of these issues go away, perhaps through executive orders or the appointment of a new, pro-crypto SEC chair. 

‘Rah-Rah’

Still, it’s unclear how far Trump’s embrace of digital assets will go. After all, crypto markets are notoriously fickle and a lot could happen between now and the beginning of the next presidential term to revive Trump’s previous resistance to an asset class infamous for scandals and “thin air” valuations. 

At least for now, however, crypto executives are happy to hear Trump making the noises they want to hear.   

“All Trump has had to do is go ‘rah-rah, go Bitcoin,’” said Dan Tapiero, who runs digital-asset investment firms 1RoundTable Partners and 10T Holdings. “It’s the lowest bar that needed to be crossed to get people at our space excited.”

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