Despite the tawdry drama in the courtroom, what has really caught my eye is the shifting policies towards Bitcoin.
A year ago, the political consensus was anti-Bitcoin and prospect of investors being able to access Bitcoin easily was still a pipe dream. Fast forward 12 months, and we have seen some Democrats softening their anti-Bitcoin stance, heard Trump turn pro-Bitcoin and witnessed a hugely successful launch of 11 Bitcoin ETFs on the New York Stock Exchange and Nasdaq, with Larry Fink’s BlackRock Bitcoin ETF leading the pack and racing to $20bn USD in assets in just a few months (the fastest growing ETF in history).
Polling suggests that bitcoin holders in the US are largely nonpartisan and are broadly split between Democrats and Republicans. Trump appears to have decided that Bitcoin policy is a potential vote winner. In a move expected to appeal to Bitcoin enthusiasts, his campaign has begun accepting donations in bitcoin. On 1 June Trump said that that he ‘will ensure that the future of crypto and Bitcoin will be made in the USA… I will support the right to self-custody to the nation’s 50 million crypto holders.’
Bitcoin certainly seems to fit the American psyche. In the ‘land of the free’, where guns outnumber people, and you have the right defend your home and your family, being able to choose your currency doesn’t seem like a stretch. And we certainly shouldn’t be surprised if they don’t roll over to have their tummies tickled if they think someone is threatening their property. In short, if voters feel threatened, it could easily secure their vote.
So where do Joe Biden and the Democrats stand? That seems like a question with a less straightforward answer. Philosophically, Joe Biden has been, to put it politely, wary of Bitcoin. Certain sections of the Democrat party, led by Senator Elizabeth Warren, have been vocal and vociferous opponents to Bitcoin and the crypto market more broadly. However, not all Democrats are so opposed. Whilst there has been support from both Democrats and Republicans for recent pro-crypto legislation, Biden has exercised his right of veto twice in recent weeks. Could the Democrats be softening their stance to be less threatening? Might they persuade Biden down that path too?
What seems clear is that a Trump victory will usher in a new wave of crypto-normalisation.
Currently, US bitcoin ETFs are nearly exclusively with one custodian – Coinbase. Coinbase also provides an exchange, and while there is a wide number of other crypto exchanges, recent experience suggests these shouldn’t exactly be seen as super reliable - think FTX and Sam Bankman-Fried.
Allowing mainstream custodian banks and exchanges to participate would certainly seem to be a tailwind to Bitcoin and the wider industry, helping to reach a broader audience. There is no lack of interest from mainstream banks and exchanges who have seen the success of the bitcoin ETFs and see a market opportunity they can capitalise on.
What about the UK’s election?
It is worth remembering back two years to when Rishi Sunak was Chancellor, and he expressed his ambition to make the UK the ‘global hub’ for cryptocurrencies. That goal seems to have been gathering the proverbial dust (!). The UK regulators have been slow out of the blocks with only a very recent approval of Bitcoin ETNs and even then, retail investors have been excluded.
It seems we Brits aren’t so suited to Bitcoin as our gun-loving friends over the pond. Bitcoin seems such a peculiar and foreign thing and the idea of backing a wrong ‘un scares us rotten. So, election material, it seems it is not.
If Bitcoin works its way to become the global reserve asset, which it may just do, we might end up wishing Rishi had fulfilled that ambition.
Adam Gregory – Senior Investment Consultant at Cartwright
