(Kitco News) – Politics and cryptocurrencies continue to converge as the number of ‘crypto voters’ in the U.S. grows, with a recent Coinbase study noting that they are diverse, enthusiastic, and poised to impact key battleground states in the upcoming U.S. presidential election.
“Crypto voters are younger, more diverse and united in their desire to update the system and build wealth for themselves,” Coinbase said. “1 in 6 crypto owners live in seven key battleground states. They’re more bipartisan than you think,” and “They're enthusiastic to vote and going to have a big impact in the races that decide the 2024 election.”
The bipartisan makeup of this group shows that crypto appeals to voters of all types, with 35% claiming to be Democrats, 34% Republicans, and 31% saying they are “persuadable about the party to which they belong.”
Coinbase also noted that nine out of ten “crypto owners say they are likely to vote on November 5,” and “They are 4x more enthusiastic than eligible voters to vote for pro-crypto candidates.”
These findings help shed light on why cryptos have become a hot-button issue in the U.S. Presidential election, even though the topic was not discussed at the recent presidential debate.
Former U.S. president and current Republican presidential candidate Donald Trump understands this and has made great efforts to appeal to pro-crypto voters, referring to himself as the “crypto president” and doing a complete 180 in his stance on cryptos when he was president when he called the industry a “scam.”
That is also why Trump made headlines when it was revealed that he will speak at Bitcoin 2024 in Nashville, Tennessee, on July 27 – the largest Bitcoin (BTC) convention of the year.
ANNOUNCING: PRESIDENT DONALD J. TRUMP TO SPEAK AT #BITCOIN2024 pic.twitter.com/F2mwECVMTW
— The Bitcoin Conference (@TheBitcoinConf) July 10, 2024
“While digital asset supporters are not all single-issue voters, given how important the topic is, Trump may pick up significant support by being overtly vocal and supportive of digital assets,” said Taras Kulyk, founder and CEO at SunnySide Digital, in a note to Kitco Crypto.
“While I doubt Trump will have any substantive policy announcements, I’d wager he may have some comments about Ross Ulbricht being released/pardoned under a Trump administration as well as support of the heavy industrial activity of bitcoin mining and supporting services,” he added. “Those messages will likely win strong support from communities that have seen economic growth from this sector that have been under scrutiny by the current administration.”
“I do agree that the stance that the SEC has taken under Gensler, guided by the Biden administration, in particular Elizabeth Warren’s influence and fear-mongering, has greatly damaged Biden’s support in the digital asset community,” Kulyk said. “However, Biden does have the ability to change the current landscape, allow the appropriate integration of digital assets, and cease the persecution of the ongoing economic innovation that is within the Bitcoin community.”
“Canada will likely see a massive change in policy as Trump moves the needle towards the integration of bitcoin and digital assets into the mainstream narrative and financial markets,” Kulyk concluded.
According to a June 2024 Republican public opinion poll conducted by Paradigm which sought to better understand how this voting bloc feels about crypto, “The results were clear: Republicans embrace financial freedom.”
28% of Republicans polled said they currently own or have bought crypto, which is higher than the 19% national average of all registered voters a study by Paradigm found in March 2024.
“Republican candidates defending crypto – such as Sam Brown, Dave McCormick, and Bernie Moreno – have strong support for their positions from GOP voters,” the report said. “Republicans sharply disagree with the Warren-Gensler worldview of centralized control: CBDCs, debanking, and forcing all financial transactions through big banks. In short, Republicans understand the appeal of crypto and support congressional action to establish clear and predictable rules.”
This group of voters has also become more diverse in recent years. Paradigm found that “Republicans who own crypto are more non-white and younger than typical Republicans, exactly the votes Trump needs in this election.”
Republican crypto owners also said they planned to make additional purchases in the future, while those who don’t currently own crypto are warming to the idea.
“87% of crypto-owning Republicans stated an intent to buy more crypto in the next twelve months, and 13% of non-crypto-owning Republicans said they were likely to buy crypto for the first time in the next twelve months,” the report said. “Crypto ownership is strongest among Republicans under the age of 40. 45% have bought or own crypto.”
While most crypto proponents cite different reasons for their interest – including the technology and the potential for significant upside – distrust in the current system has motivated many of these voters to venture into the world of crypto.
“Republicans have distrust of institutions, and seek the freedom crypto can provide,” the report said. “As the Biden Administration and its allies continue to weaponize banking regulations, Republican voters simply do not trust financial institutions. 67% say they are dissatisfied with how the financial system in America works today.”
The study found that “72% of Republican voters are at least somewhat concerned that they could lose access to financial services as a result of their political or religious views.”
They also think lawmakers have neglected their duties by not passing comprehensive regulations for the crypto industry.
“Republicans want Congress to do something about crypto regulatory unclarity, and they agree that elected representatives should take the lead in crafting crypto regulatory frameworks – rather than unelected bureaucrats,” Paradigm said. “60% say Congress should pass legislation that establishes clear and predictable rules for cryptocurrency companies and entrepreneurs.”
And their desire for privacy is highlighted in the pushback this cohort has voiced to central bank digital currencies (CBDCs).
“Republicans oppose any IRS invasion of privacy or viewership of private financial transactions, which would be enabled by the pending DeFi portion of the IRS’s digital asset broker rule,” the report said. “They also strongly oppose the creation of a government-tracked Central Bank Digital Currency. 94% of Republicans say their financial transactions should remain private. Of the Republican voters who said they knew what a CBDC is, 68% oppose the creation of one.”
Paradigm found that Trump’s pro-crypto stance has helped improve his standing with the “Never Trump Republicans” and has made the party’s base “more excited about him.”
“As Trump consolidates support of Republican voters and prepares for the general election, crypto is one issue that helps him with the GOP base,” the report said. “13% of Republicans not currently planning on voting for Trump say his newly-stated crypto positions make them more likely to vote for him. 38% of non-white Republican Trump supporters said Trump’s support for crypto makes them more excited to vote for him.”
Overall, Paradigm found that “Republicans are generally positive on crypto,” which helps explain Trump’s pivot to embracing the asset class.
“More Republicans say crypto is a mostly positive force in the economy (36%) than negative (30%), with this +6 point margin widening to +12 points among men, +42 points among GOP voters under 40, and +27 points among non-white Republicans,” the report said.
The industry is also seen as a way to combat the rising power of China, which has already started distributing its CBDC, the digital yuan, to citizens.
“After learning that China is developing a digital yuan, more Republicans support (40%) the US creating a pathway for American private sector companies to build payment products, like stablecoins, to compete with the digital yuan than oppose (31%),” Paradigm said. “Support for pathways to digital yuan competitors is highest among men (52%) and college-educated Republicans (49%).”
Recent political developments
These findings help explain why the Republican National Committee approved a new party platform on Tuesday that includes support for cryptocurrency innovation.
“Republicans will end Democrats’ unlawful and un-American Crypto crackdown and oppose the creation of a Central Bank Digital Currency,” the RNC said. “We will defend the right to mine Bitcoin, and ensure every American has the right to self-custody of their Digital Assets, and transact free from Government Surveillance and Control.”
The party plans to finalize the language and formally adopt the platform at the Republican National Convention on July 15.
In an attempt to show that a Democrat administration is also open to advancing the priorities of crypto companies, Anita Dunn, senior advisor to President Biden, met with more than a dozen crypto industry leaders on Wednesday in a meeting organized by several Congressional Democrats.
"A chunk of the meeting consisted of industry describing their terrible experiences with the @SECGov,” tweeted Fox Business reporter Elanor Terrett. “Anita Dunn seemed genuinely surprised by our description of the SEC's actions. I was also told that [Mark Cuban] gave attendees permission to quote him as saying at the end of the meeting (after Dunn had left) that ‘Biden should fire Gary Gensler.’”
“It’s possible the crypto industry has never had more influence in national policy than this very moment,” said Alex Thorn, an analyst at Galaxy Research. “Fmr. President Trump and the Republicans have substantially made crypto a genuine policy issue, and excitement is building for Trump’s appearance at the world’s largest Bitcoin conference in 2 weeks.”
“Crypto-focused Super PACs are among the best funded this campaign cycle, and some signs are showing that Democrats are starting to take notice,” he said. “Moderating stances on the FIT 21 bill, which 71 House Democrats including Rep. Nancy Pelosi (D-CA) supported, coupled with the policy roundtable this week that included a senior White House official, suggest the Democrats are not yet willing to completely cede the issue.”
“All this to say there is a lot of activity, and many on all sides of the aisle and issue are working aggressively this Summer to capitalize on the attention,” Thorn said. “The failure of the House to succeed in overriding Biden’s veto of SAB 121 was disappointing, though reticence to cause more political complications for the White House at a time when Pres. Biden’s candidacy is being called into question may have played a factor in tepid Democratic support.”
Thorn was referring to Thursday’s vote in the House in which they failed to gather enough support to override President Biden’s veto of a resolution affecting an SEC rule on banks recording cryptocurrency as a liability on their balance sheets.
“While some crypto policy advocates have voiced opposition to pushing legislation at this time, another camp believes that it may be more prudent to ‘play the game that’s on the field’ by supporting common-sense legislation rather than hoping for a more favorable field to play on, which of course may never come,” he concluded.
Evidence emerged on Thursday that the SEC, potentially encouraged by the Biden administration, sees the need to soften their regulatory approach – at least until after the election.
According to a report from Bloomberg, “The SEC has opened a path for banks and brokerages to avoid reporting their customers’ crypto holdings on their balance sheets.”
Several large banks have got the green light from SEC staff to bypass strict balance sheet reporting requirements on crypto by ensuring their customers’ assets would be protected in the event of a bankruptcy or failure, per @Aiacone https://t.co/6lyELKnOeu
— Emily Nicolle (@emilyjnicolle) July 11, 2024
This issue was at the heart of the debate regarding SAB 121, which required that publicly traded companies that safeguard crypto assets on behalf of clients must carry those client assets as balance sheet liabilities.
To offset the risks involved, Bloomberg said that as part of the compromise, “companies must offset risks those assets pose in order to bypass controversial crypto accounting guidance that has become a target of Congress.”
“The SEC’s accounting stance could expand the range of companies that American crypto holders could choose among to stow their growing portfolios,” Bloomberg reporter Amanda Iacone wrote. “Lenders have argued the accounting treatment effectively barred them from offering crypto services because bigger balance sheets would trigger capital requirements set by banking regulators, not the SEC.”
