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Stephen Overle
Hey, welcome back to Politico Tech. I'm your host, Stephen Overle.
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Declan Hardy
Will we lead our nation into a.
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Stephen Overle
Future of financial sovereignty, of innovation, and.
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Declan Hardy
Of prosperity, or will we let unelected.
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Stephen Overle
Bureaucrats and four competitors write the rules for us? That's Vice President J.D. vance speaking Wednesday at the Bitcoin conference in Las Vegas.
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Declan Hardy
And I'm here today to say loud.
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Stephen Overle
And clear with President Trump, crypto finally has a champion and an ally in the White House. And he's right. President Donald Trump has been an unabashed crypto champion since taking office in January. He has appointed the first ever crypto czar, rolled back Biden era rules and regulations, and dropped lawsuits against crypto companies and entrepreneurs accused of wrongdoing. Trump has quite literally reversed the industry's fortunes in Washington. And now the industry's fortunes have also become Trump's fortunes. The president and his family have plunged deep into crypto. And just this week, the company behind his social network, Truth social media, raised $2.5 billion to go out and buy bitcoin. So if bitcoin does well, Trump's company will get richer. Politico Capital Markets reporter Declan Hardy tells me Trump's crypto ventures are not only riling up Democrats, but even some Republicans and industry players are now concerned. On the shoot today, he tells me why. Here's our conversation. Declan, welcome to Politico Tech.
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Declan Hardy
Thanks for having me.
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Stephen Overle
So Trump is leaning even more into crypto more than he has been. And he already had been pretty bullish on cryptocurrency. What is inspiring all these new moves?
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Declan Hardy
Yeah. So just to take a step back, I mean, if you go back to the campaign trail last year, I mean, this was, it was at Bitcoin 2024 in Nashville where Trump talked about making the US a crypto capital of the planet. Right. And it was sort of really a sea change in some respects for how he has his relationship with this industry historically. You know, he once called crypto and bitcoin scams and based on thin air, so fast forward today. There was always an expectation coming into this administration that it was going to be friendlier for crypto. I think the unexpected element of this is the fact that it's not just the Trump administration leaning into the industry. It's also the Trump business empires.
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Stephen Overle
Right.
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Declan Hardy
And what we're seeing really is kind of this unprecedented situation where many of the President's business ventures or other ventures tied to the president or his family members just keep jumping in. And really, in some respects, it speaks to the opportunity and the state of the market in crypto right now. I mean, bitcoin just hit a new all time high in part on optimism about the regulatory landscape for crypto in D.C. and so it's just kind of creating this perfect storm of circumstances.
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Stephen Overle
Well, let's break it down in those terms, like Trump's personal interests and then also his administration's actions. And there's obviously conflicts potentially between the two of those. But starting with the headlines this week, Trump Media is creating a, quote, bitcoin treasury, which I don't even know what that means, so maybe let's start there. What exactly is Trump Media looking to do?
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Declan Hardy
Yeah, so what they essentially announced on Tuesday was that they had struck deals with about 50 large investors. We don't know actually who those people are yet. And as a result of those deals, they've raised $2.5 billion through selling stock and debt. And, and that money is essentially going to be used to go on a bit of a buying spree on Bitcoin. And what they're going to do is create what's called a bitcoin treasury, which is essentially, they're going to hold a bunch of bitcoin on their balance sheet and hope it appreciates over time. And it's kind of a weird phenomenon, but one that's becoming increasingly popular in corporate America. The best example is Michael Saylor's strategy. It's a company formerly called MicroStrategy. This was like a software company for years. And in the last couple of years, they've really started to lean in. And just, just Michael Saylor is obviously a huge bitcoin bull. And they've really just leaned in and bought bitcoin whenever they get the chance. They raise debt and they buy bitcoin and they keep doing it on a weekly basis and the stock has just soared since then. So what we're seeing from that perspective is Trump Media really trying to tap into that growth potential there.
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Stephen Overle
And Trump has previously created his own meme coin. Members of his family have their own coins I mean, are those ventures connected and have they been financially successful and lucrative for the President?
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Declan Hardy
So they're not connected, which is strange because it's kind of jarring to think about all of these different ventures existing on their own. Right. Trump Media, for instance, is majority controlled by the President. His stake is in a trust overseen by Don Jr. But the company is run on a day to day management basis from Devin Nunes, the former Republican congressman, in terms of the profitability it has. And the best example I can give you is the Meme Coin, for instance. And this is an inherently risky crypto token. Historically, these things have pretty much whipsawed in price. And in the case of Trump's meme coin, the 80% of this overall token supply is controlled by a Trump Organization affiliate as well as another entity called Fight Fight Fight llc. And so anytime the token goes up in value, that 80% stake that they own in the token gets that much more valuable. Now it's on paper value. So that's a important distinction. This is not just cash that's funneling into the Trump Organization's pockets. I mean, obviously they would have to sell out of those tokens, which could create a run on the price and a bit of a mess. But nonetheless, I mean, it is padding his wealth. And in addition to the 80%, anytime the meme Coin is traded, there's a trading fee that's collected by the Trump Organization and its partners in this. And so interesting that based on some estimates from a blockchain analytics company, has generated like $320 million in fees. So since it launched in January, which.
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Stephen Overle
Is just in fees, that's, that's a lot of fees.
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Declan Hardy
Just in fees. Yeah, and that's a huge chunk of change.
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Stephen Overle
And the other thing that we've learned recently is that buying into Trump's Meme Coin also buys you access to the President because he just had this big dinner with a lot of big investors in his cryptocurrency. Talk to me about that. What was this dinner? Who was there?
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Declan Hardy
So the dinner is, this was for the top 220 holders of the Meme Coin. And what you had to do essentially was there was a two week long buying window where if you bought enough of the token and held onto it for enough within this period of time, you would get included on this leaderboard and as a result you get an invite to this dinner. So we saw this was happened last Thursday at the President's Golf Club in Virginia. And the guest list, which actually has not been publicly released Though many of the attendees have posted online, they're now talking about publicly about their time there is very eclectic. One of the best examples is you have crypto billionaire Justin sun, who, who see, he is a entrepreneur in the industry. He's very well known, he's very outspoken, he's got a lot of character to him. In 2023, though, he was sued by the SEC and on fraud charges. And earlier this year, as the agency pulled back on a bunch of enforcement cases, one of those was the Justin sun case. It stayed the case and is now working toward a potential resolution of it, according to court documents. And so it's kind of an interesting nuance there. And the key to know about Justin sun is that he is also an investor and a backer of another Trump linked crypto venture, World Liberty Financial. That relationship in particular has raised a lot of concerns and questions among Democrats and ethics watchdogs and even, you know, former SEC officials. And in addition to Justin, though, I mean, the other attendees were Lamar Odom, the former NBA basketball player who was married to a Kardashian for a while, as well as just various kind of crypto traders and entrepreneurs. And the dinner itself, I mean, going into it, there was an expectation that this was going to be a private, exclusive gala with Trump and they would be sitting at the table with him and talking about crypto. In reality, it was not that. I've spoken with a number of attendees who were, who were not too thrilled with their experience. My understanding is that he was in the room, he spoke for about 30 minutes, a little bit about crypto, a little bit about other things, and it was not necessarily the experience that a lot of folks were expecting.
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Stephen Overle
Well, what you're talking about, I mean, illustrates the concern that has been raised with conflicts of interest here. Right? Because you have Trump, the president, engaging with folks who are direct investors in a venture that is enriching him. You also have him heavily involved in an industry that he, his administration has been deregulating, you know, since January. They've rolled back some rules that the Biden administration had put in place or proposed. As you mentioned, they've dropped lawsuits against some individuals who clearly have a financial relationship with Trump. What are folks saying about this potential conflict of interest here and what kind of problems it raises?
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Declan Hardy
This is really an unprecedented situation. And critics have say that they have seen nothing like this ever before. Right. I mean, this is, it wasn't that long ago in the grand history of this country that Jimmy Carter had to sell his peanut farm, right? Today we have a president with various interests across this industry that, to your point, directly stand to benefit from his own regulation of this industry and his perspective and his policies on it, and it's creating this. I think the best example I can give you is that in the first Trump administration, a lot of the conflicts, concerns that we heard about were centered around the Trump Hotel, for instance, right in D.C. and the idea that lobbyists, foreign governments, were coming in to D.C. and they were staying at the Trump Hotel in hopes of currying favor with him. This is not that. And in large part because at the most basic level, you could get a reservation at the Trump Hotel and you get a place to stay for the night, there is a lot of concern and questions about, beyond access to the president, what does buying the meme coin get you, other than a highly risky speculative asset? And I think that's raised a lot of really interesting questions that. That folks are really trying to make sense of in a lot of ways. And Democrats are now trying to push behind legislation banning presidents from offering Meme coins going forward. Ethics watchdogs are really blasting any of these moves when they're coming out. But I think there's a concern among some of the critics that people are becoming numb to this because it is so much.
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Stephen Overle
And so when you've gone to the White House, you know, presented them with these concerns, what kind of response do you get?
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Declan Hardy
It's interesting. There's a couple of different reactions that you get. I mean, the White House has generally said that the President is following all of the ethics rules that he needs to. There's no conflicts of interest here. Essentially, there's nothing to see here. Right. These are private ventures that they are doing private business, and the President is focused on the American people, not his business interests. I think the distinction here is that, at least from a critic's perspective, these are the President's business interests. Right. He did not divest from these stakes. And so, I mean, it doesn't take much to realize that he stands to directly benefit from some of these moves. Hi, I'm Jack Blanchard, Playbook's Managing editor and author.
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Stephen Overle
And I'm Dasha Burns, Politico, White House.
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Declan Hardy
Bureau Chief and Chief Playbook Correspondent. And we are the new hosts of the Playbook podcast. Every morning, Dasha and I dig into the top story of the day and give you some analysis and insight into what's really going on in D.C. and the world. So join us. Every weekday morning, listen to the Playbook podcast. Wherever you get your podcast.
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Stephen Overle
For Congress, you Mentioned Democrats, obviously. I can easily see them rallying around this and using it to not only criticize crypto potentially, but certainly to criticize the president. What about Republicans? I mean, are any of them sort of raising questions about this or expressing that like this complicates their job of regulating this industry?
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Declan Hardy
There's definitely a degree to which Republicans are uncomfortable with many of these moves. I think this was best seen in the Meme Coin dinner. For instance, we saw senators like Cynthia Lummis of Wyoming, who's a major crypto bull, pretty much saying this is giving her pause. She's not really comfortable with the optics of this, and it's not a great look. At the end of the day, House Financial Services Chair French Hill was on TV the other day talking about how some of the Trump fans moves around crypto have made his life more difficult because at the end of the day, lawmakers are trying to push through bipartisan legislation proposing how to regulate this space. And as a result of that, every time one of these new conflicts rises up, it gives critics new ammunition to attack some of these efforts and to say, are we approaching this in the right way? Do we have the proper ethics guidelines in place? And that's ultimately making lawmakers jobs messier.
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Stephen Overle
I mean, and ultimately any law they pass that affects this industry directly affects the president, who not only do they want to stay in the good graces of, but they also need to sign any legislation they pass.
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Declan Hardy
Right. And that's where it gets really tricky. And the question is, what is ultimately the motivation behind some of these efforts? Right. Where we're seeing this currently bubble up is in this bill called the Genius act, which is bouncing around the Senate and is seemingly primed for final passage in the coming weeks. This is a bill that proposes how to regulate stablecoins, which are specific type of crypto token. They're really critical to how the market operates. Essentially, their stablecoins are tied to a asset like the US Dollar, and so their value is always consistent and that allows the free trading of tokens throughout the market. One of the Trump crypto ventures, World Liberty Financial, recently launched a stablecoin. And that has raised a whole breadth of conflicts questions. And how would this bill apply to the USD1 token, which is the World Liberty Financial stablecoin? Does the Trump family stand to benefit from it? Again, this is just kind of the, the latest example of how this is all making lawmakers jobs harder.
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Stephen Overle
You know, I've been thinking as you have been relaying all of this, earlier this year, we had the president and COO of Coinbase, Emily Choi, on the podcast. And I asked her then about the president getting increasingly involved in crypto and whether that made her nervous at all as a big player of the industry. And she said, no, that, you know, it was a promising thing to have the president and his family be so engaged, so interested in this space. I have to wonder what you're hearing from industry nowadays and whether, at least quietly, behind the scenes, this is giving folks pause to have the President of the United States be an increasingly influential figure in their industry.
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Declan Hardy
Yeah. I mean, look, at the end of the day, Trump is a major win for the industry. He's been very friendly. He's going to be very friendly. This is not the Washington that they were operating in 12 months ago. That being said, behind closed doors, a lot of lobbyists and executives are saying what some of the lawmakers are saying as well is that this is not helpful to the industry's policy agenda. I mean, for the last decade, essentially, this industry has been calling on Congress and the regulators and the White House to give it some sense of clear rules of how crypto should operate in the US and forever, pretty much, the SEC and others were saying, we've got rules for stocks and bonds. You should follow those, too. We now have an administration that's come in and said, we no longer think that's the case. We want to write crypto specific rules. We think that's important. We're going to work with you on that. So the industry is overjoyed by that. But at the end of the day, those efforts are getting complicated by some of these Trump family endeavors. And as a result of that, that's creating some heartburn in the industry, I think, and some folks who are uncomfortable with it and saying this is not helpful to the broader mission of what we're trying to do in Washington.
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Stephen Overle
So with that in mind, I mean, what are you watching for next? Obviously, Trump is only getting deeper into crypto, so I assume we can probably expect that to continue from him. But for these other folks who are impacted, both industry and Congress, what are you watching for next?
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Declan Hardy
I think the most immediate shoe to drop here will be what happens with the stablecoin legislation and ultimately, how many Democrats do support that. I mean, the thing we haven't talked about is that the crypto industry is also a political beast on its own in terms of campaign finance and how much money gave out in the last year's election.
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Stephen Overle
Yeah.
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Declan Hardy
And so there's no indication that they are slowing down, that that is going to be a major role in 26 and in 28. And so it raises an interesting question to see how Democrats are really handling this, because ultimately, the industry does need Democratic support to get its legislative priorities through on Capitol Hill. More broadly, however, I think there is more to watch around how this industry reacts to the Trump efforts over time. And I do wonder if we're going to see more executives or lobbyists talking out loud about how this is not helpful, how they would like to see the family rein it in or the partners rein it in and really kind of just take a beat at the end of the day and hold off for a little while.
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Stephen Overle
Yeah. I'll be interested to see, frankly, how these ventures that Trump is getting into with crypto perform, because we know crypto can be volatile. And so the president is obviously very bullish on the industry right now. His family's very bullish on the industry right now. It'd be interesting to see what happens if the fortunes in that area turn. I think that's a big, outstanding question in my mind.
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Declan Hardy
Well, and that's ultimately, that's, I think, the biggest question at the end of the day. Right. I mean, we're, we're not even three years removed from the fall of ftx, which was obviously this historic moment in crypto. It totally changed the vibes around crypto in D.C. this market, to your point, is very unpredictable. It's extremely volatile. The macroeconomic environment is extremely cautious right now. A lot of folks are very on edge. And ultimately, if the market goes into a tailspin and Americans are struggling with inflation or something like that, are lawmakers really going to prioritize crypto legislation?
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Stephen Overle
Right. Or as the president. Well, listen, Declan, thanks for being here on Politico Tech.
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Declan Hardy
Thanks so much for having me. I appreciate it.
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Stephen Overle
That's all for today's Politico Tech. If you enjoy Politico Tech, please subscribe and recommend it to a friend or colleague. And for more tech news, subscribe to our newsletters, Digital Future Daily and Morning Tech. Music in our show comes from the mysterious Brake Master Cylinder. Our producer is Nurmo Malaijko. I'm Stephen Overlea. See you back here next week.