While many United States crypto advocates have thrown in their lot with former President Donald Trump in the upcoming presidential elections, some of his policies run counter to the deflationary and decentralized principles on which the industry was founded.
Trump has secured strong support within the crypto community since making several clear statements that he would support the industry under his administration.
Overall, candidates’ policies toward cryptocurrencies have gained traction in the public discourse as the growing number of crypto holders has transformed into a potentially influential voting block.
On March 14, Paradigm published a poll revealing that 19% of surveyed registered US voters have purchased crypto, highlighting that “a fifth of the country is not a niche subgroup.” It concluded:
“This data collectively shows that crypto owners are themselves a swing vote demographic, one that could be decisive if the election is yet another razor-thin race.”
The May 7 survey “Crypto attitudes in the swing states” from Digital Currency Group and The Harris Poll found that 93% of registered voters from six states considered themselves politically active and planned to vote.
According to the survey, 26% of respondents paid close attention to a candidate’s stance on crypto, and 21% considered crypto a significant issue influencing their decision in the upcoming election.
For now, Vice President Kamala Harris hasn’t specified any crypto policies to attract crypto advocates, nor has she signaled a willingness to depart from the current administration’s more strict policies.
In contrast, Trump introduced himself as the “crypto president,” offering many promises to benefit the US crypto industry.
However, crypto-advocate voters may be surprised by the broader economic policies the Trump campaign is proposing.
Make inflation high again?
The core objective of Trump and his vice presidential running mate, Ohio Senator J.D. Vance, is to reindustrialize the US and restore its manufacturing sector to its former glory.
To “make America great again,” Trump has offered some key policies to recreate a solid industrial landscape. However, despite both repeatedly claiming that “inflation is a disaster,” many of his proposed economic policies have an inflationary component.
Globalization diminished the US manufacturing sector, as other countries, mainly China, offered similar goods for cheaper.
Trump wants to set heavy tariffs — “10% to 20% tariffs on foreign countries that have been ripping us off for years,” as mentioned in an Aug. 15 rally in North Carolina.
Trump previously imposed tariffs on imports during his presidency. Many maintain that this policy backfired, as the number of US manufacturing employees decreased during his presidency and continued to fall in the Biden administration, which added more tariffs in response to alleged unfair trade practices from China.
All employees, manufacturing/all employees, total nonfarm from 2000–2024. Source: FRED
The goal of tariffs is to protect domestic industries that are unable to compete with foreign businesses. A collateral effect of this protectionist measure is that consumers will find foreign products more expensive and, subsequently, a possible factor for an economic slowdown.
Combined with tariffs, the Trump-Vance administration says the US needs to weaken the dollar to boost US exports.
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The idea behind a weak dollar is to provide a more even playing field between US goods and foreign goods by making imports either the same price or more expensive.
Trump’s intention to devalue the dollar could face significant hurdles, given the Federal Reserve’s independence from the White House.
During Trump’s 2017 term, he unsuccessfully pressured the Fed when he called on Chair Jerome Powell to lower interest rates.
The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!
— Donald J. Trump (@realDonaldTrump) December 24, 2018
However, Powell’s term as Fed chair will come to an end in 2026, and the president has the authority to nominate a new candidate, though that choice would require Senate approval.
If Trump wins the 2024 election, he might use this opportunity to nominate someone more aligned with his views on monetary policy, potentially setting the stage for significant shifts in the Fed’s approach.
Peter M. Moricz, partnerships lead at Bitcoin oracle dlcBTC and a former derivatives trader with two decades of experience in financial markets, believes inflationary policies in the current status of the US economy could be dangerous. He told Cointelegraph:
“With America having $35 trillion in debt, the only saving grace is confidence in the strong dollar. If that goes away, America will be in big trouble, which means BTC will be a huge buy opportunity.”
Moricz believes the dollar and the bond market would both sell-off, causing a domino effect on derivatives priced in dollars. He further noted that BRICS nations are already moving toward de-dollarization.
In this scenario, Moricz believes Bitcoin (BTC) would surge with a weak dollar, as “BTC thrives in chaos, and chaos is what Trump will cause if he promises to start his presidency with inflationary economic policies and deregulation.”
Another element in Trump’s inflationary economic policies is his firm commitment to lower taxes. However, he defends his stance without committing to any cuts on public spending. This would place more pressure on the ever-growing US federal public deficit, which has currently exceeded $33 trillion.
Deficit tracker from 2019–2024. Source: Bipartisan Policy Center
Trump hopes that lowering taxes will boost the economy and raise enough revenue to offset the tax cuts. He needs the US economy to flourish to accomplish his goal, so he’s combining these economic stimulation policies with deregulation.
Deregulation to make the US the “crypto capital of the planet”
During his administration, Trump made a sweeping push to deregulate with an executive order requiring the annulment or abolishment of two regulations for every one approved.
Should he be reelected, he is seeking even more profound economic deregulation, especially in the energy and environmental sectors. He aims to remove “burdensome regulations” to liberate the market from these expenses, saying it will enhance entrepreneurship and US competitiveness.
Trump has also been open about his wish to deregulate crypto and artificial intelligence. Nick Cowan, group CEO of fintech company Valereum, told Cointelegraph:
“Deregulation should cut the current ‘red tape’ so that innovators can build their businesses.”
DlcBTC’s Moricz said that if crypto deregulation occurs, “it will return to the original ethos of the libertarian crypto idea of Bitcoin: no regulation, no government interference.”
Cowan emphasized the importance of investor protection, stating that the “right balance could deliver a digital utopia,” where a fast-growing economy with clear regulatory perimeters would drive adoption and position the US as the world’s leader in crypto, benefitting both the US and the industry more broadly.
Trump has pledged that if reelected, he would fire Securities and Exchange Commission Chair Gary Gensler “on day one” to reverse the current anti-crypto stance of the SEC, stating at the Bitcoin Conference in Nashville that “from now on, the rules will be written by people who love your industry, not hate your industry.”
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However, the president does not actually possess the power to fire the head of the SEC without cause.
It is debatable whether Trump was legitimately orange-pilled or simply embraced crypto as a political campaign strategy, as whistleblower Edward Snowden warned at the same conference.
At the #Bitcoin 2024 conference, Edward #Snowden warned attendees about politicians trying to gain the favor of the Bitcoin community, advising them to vote but not to blindly follow these figures.
He emphasized that lawmakers have their own interests and should not be viewed… pic.twitter.com/mkjUHBkqGn
— TOBTC (@_TOBTC) July 27, 2024
However, what is a fact is the great support his candidacy is receiving from the US crypto industry, which has become incredibly active this year, with an outstanding 48% of all corporate political donations coming from crypto firms.