World Liberty Financial, a crypto venture set up by Donald Trump, his three sons, and their long-time business partners start selling its token to qualified investors last week, with the aim of raising USD 300bn. According to press reports, the launch was not particularly successful, as only USD 12mn was raised, 4% of the initial offering.
The FT attributes this poor performance to the scepticism that accompanied this new venture from industry experts, for two reasons. On the one hand, the venture’s business proposition does not seem particularly enticing, as its token “gives holders voting rights on ‘certain WLF Protocol matters’, but confers ‘no economic rights’ in the company and cannot be traded or sold back to the business.” On the other hand, there is the widespread fear that aligning with one presidential candidate only may eventually hurt the crypto industry. As the FT says: “the Trump family’s project risks wrecking their painstaking efforts to rebuild crypto’s battered reputation after the market crash of 2022. Some executives have been sued by US authorities or sent to prison for their failure to protect investors.”
Political polarisation of the digital asset space has become evident since Trump made a 180 degree U-turn on crypto. Initially, he considered the industry a scam to be banned. “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” Trump wrote on Twitter in July 2019, warning investors about the risks of “unregulated crypto assets,” saying they could facilitate “unlawful behavior, including drug trade and other illegal activity.”
Subsequently, Trump has become crypto’s chief advocate, especially after joining forces with Elon Musk, a fervent supporter of the crypto space and the launcher of his own token, the Doge Coin. It was noted that DOGE Is also the acronym of “Department of Government Efficiency,” the government department that Trump would like to offer to Elon Musk, if re-elected in November. On October 15th, Trump wrote on X that “Crypto is the future.”
At the same time, Trump became the chief critic of Central Bank Digital Currencies, or CBDCs, the digital equivalent of cash that many central banks around the world are preparing to issue in coming years as an additional liability, along with banknotes and central bank reserves. As discussed in the book I wrote with Casey Larsen, “Smart Money: How digital currencies will win the new Cold War – and why the West needs to act now,” which will be published this week, Donald Trump said the following during a rally in New Hampshire on January 18th, 2024: “As your president, I will never allow the creation of a central bank digital currency…”
On the other hand, Kamala Harris, like the Democratic party in general, is much more cautious about developments in the crypto industry and is more in favour of CBDCs, although recent reports suggest that support for CBDCs will not necessarily translate into a policy push in their favour, even if she wins the election. In March of 2022, US President Biden signed an executive order on the “responsible development of digital assets,” putting the conditions in place for the development of a US CBDC, the digital dollar.
In any case, the already polarised US political landscape has yet another battlefield wherein the country’s wider divisions are replicated. This does not bode well for the digital asset industry, which will see the co-existence of CBDCs at the bottom of the industry (as the foundation of trust), stablecoins/tokenised deposits as the new form of commercial bank money, and crypto assets as the volatile assets for financial speculation. For these assets to deploy their positive impact on the economy, a coherent rather than balkanised regulatory system is required. But it is more likely that politics will prevail over reason in this field as well.
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