Edward Robinson is the story editor for DL News. The opinions expressed in this op-ed column are his own.
Ever since Donald Trump embraced crypto a few months ago many in the industry have been pining for his victory in the 2024 US presidential election.
The thinking is that Trump, a politician with a taste for breaking the rules, will end the Biden Administration’s crackdown on the industry, oust Securities and Exchange Commission Chair Gary Gensler, and let crypto be crypto.
Yet it’s more than that. The former president and billionaire real-estate mogul has also pledged to make the US “the crypto capital of the planet and the Bitcoin superpower of the world.”
“We’ll get it done,” he said in a keynote speech at Bitcoin 2024 in Nashville in July to applause.
Such enthusiasm may be a tonic for bruised industry. But be careful what you wish for — Trump will not be crypto’s saviour.
Long record
For starters, there’s the former president’s long record of failing to deliver on his promises.
Trump has long vowed to end the Affordable Care Act, Barack Obama’s landmark public health insurance legislation, and replace it with something “beautiful.”
It never happened. During his presidential term, Trump, was unable to rally support and pulled the bill. He’s done nothing to advance the ball since — in his debate with Vice President Kamala Harris on Tuesday, Trump said he had “concepts of a plan.”
Then there was his vow to “drain the swamp” in Washington. Rather than curb graft, it was Trump’s own people who ran afoul of the law — eight senior officials from his Administration and his company have been convicted of crimes and sentenced to prison terms.
And, of course, Trump himself was found guilty in May on 34 counts of falsifying business records to hide hush payments to porn star Stormy Daniels.
So why should the crypto community expect Trump to keep his promises? Could he just be into crypto for the money?
He recently rolled out a purported DeFi project at a purported $1.8 billion valuation. And Trump crypto trainers in Bitcoin-orange are on sale for $499 a pair. Hmmm.
Let’s not forget that Trump has a knack for betraying his supporters, even close allies. Two dozen senior officials in his administration have turned against their former boss, including Vice President Mike Pence, whom Trump vilified for certifying Joe Biden’s 2020 win.
Fundamental tenets
The 78-year-old Republican Party nominee has also violated some of the GOP’s most fundamental tenets.
Trump has promised to impose sweeping 10% universal tariffs on imports and 60% tariffs on Chinese imports, a form of protectionism that used to be anathema to a party that championed free markets.
If implemented, the policy would amount to the equivalent of a $3 trillion tax hike for US consumers who would have to bear soaring prices on goods they need.
Trump’s plan would cost households at least $1,700 in increased taxes each year, according to the Peterson Institute for International Economics. (In early September, Trump doubled down on his plan and said 20% tariffs were likely.)
Even more radically, Trump has said he may use the proceeds from tariffs to slash or even eliminate income taxes. Policy analysts at the nonpartisan Tax Foundation have dismissed the idea as a non-starter. “The math doesn’t work,” the organisation said.
The upshot of all these plans is an economy in disarray.
Stagflation
Under Trump, the US economy would shrink 0.5% in 2025, according to Goldman Sachs. Even worse, China and other nations will respond to Trump’s tariff volley with salvos of their own. Soaring prices in a shrinking economy is a condition economists call “stagflation.”
“It’s one of those magical economic proposals that can actually cause inflation and put you into a recession – at the same time,” David Kelly, the chief global strategist at JPMorgan Asset Management, told CNN this month.
This would all be very bad for crypto.
Like it or not, Bitcoin rises and falls on macroeconomic tides, and more precisely, the Federal Reserve. Every time the Fed makes a move on benchmark interest rates, Bitcoin feels the impact the same way stocks and bonds do.
The Fed will come under pressure to curb inflation by raising rates, which will knock the bottom out of the crypto market.
If a new Trump Administration deploys sky-high tariffs, consumer prices will reverse their steady fall and increase. Moody’s, the credit rating firm, estimates Trump’s plan will raise inflation 1.1% in 2025.
Then the Fed will come under pressure to curb inflation by raising rates, which will knock the bottom out of the crypto market.
Just like stocks, BTC does better in a low rate environment because bonds are less appealing to investors. Remember how high rates and soaring inflation in 2022 helped shove crypto into a bear market? Now that rates are poised to finally fall again, who wants to return to the bad old days?
There is a silver lining, and funnily enough it has materialised in an unexpected place — the Harris campaign.
Kamala Harris’s people have been quietly taking soundings on crypto policy from supporters such as Mark Cuban, the billionaire investor.
Still fuzzy
While it’s still fuzzy, there are inklings that a Harris Administration could get behind a bipartisan crypto bill that would legally define digital assets separately from traditional securities.
This is the result the Blockchain Association, Coinbase, and other crypto stalwarts have been crying out for.
“Personally, I’m optimistic that, should the Democrats remain in the White House come January, there would be some movement towards a more supportive regime,” Noelle Acheson, the influential crypto researcher, wrote in a note on Wednesday.
Indeed, Harris, a traditional politician, might respond to persuasive lobbying and the political benefits of extending an olive branch to crypto supporters.
Trump? Well, for all the affinity there is between the MAGA crowd and many crypto folk, he may not be worth the risk. All you have to do is look at his record, and his plan.
Have a tip or comment? Contact the author at ed@dlnews.com.