Donald Trump's Bitcoin Journey: From Skeptic to Potential Champion

The evolution in Trump's thinking about bitcoin will be familiar to many people who followed a similar journey as they studied it.

A recent post by Microstrategy CEO Michael Saylor on X includes a quote from a purported conversation with Donald Trump where he discussed his evolving views on bitcoin. According to Saylor’s post, Trump made several statements that are significant for the possibility of bitcoin becoming deeply intertwined in the U.S. economy in the coming years.

"They have them paying tax on crypto and I don't think that's right. #Bitcoin is money and you have to pay capital gains tax if you use it to buy a coffee? I was talking with a friend he said 'it really shouldn't be taxed' and I agree.”

This statement has yet to be independently corroborated, but the idea of eliminating capital gains tax on bitcoin is not new. It has had bipartisan supporters in the U.S. Senate for years. Today, we are at a critical moment when a confluence of political circumstances could ignite bitcoin adoption in the U.S., and by proxy, worldwide, to an unprecedented degree.

With a Trump victory looking increasingly likely, his views may be consequential for the way bitcoin is regulated and taxed in the coming years. If he really used the phrase “bitcoin is money,” the implications are massive. To understand why, it’s helpful to review Trump’s past statements about bitcoin and crypto so that we can trace the path that led us here.

The evolution in Trump’s thinking about bitcoin will be familiar to many people who followed a similar journey as they studied it. Because it is an emerging technology that deviates from the accepted wisdom about what money is, on first encountering bitcoin most rational people will resist it and assume it is probably nonsense.

Along these lines, Trump stated during his previous administration that “bitcoin... [is] not money.” He rightly intuited that in the 21st century, U.S. power is derived principally from the dollar’s roles as the leading world reserve currency, a store of value for central banks and institutions, and medium of exchange for oil and other commodities. Insofar as he understood that bitcoin threatens this favorable arrangement, he believed that bitcoin cuts against his vision for increasing American leverage in foreign policy. The ability of the U.S. to print money and decide who gets it is indeed the most extraordinary power ever obtained by a single political body in human history.

Our open capital markets seal the deal, allowing the U.S. economy to benefit from investment of those dollars back into our financial system. This lets the federal government collect taxes on the productive capital of the entire planet. One does not simply give that up, and it would be rational to suppress new technologies that threaten change.

A few months ago, during his 2024 campaign for president, Trump changed his stance. When asked a question about whether he supports access to crypto, he replied that he’s “fine with it.” He didn’t offer justification as to why his attitude changed, but it would be reasonable to assume that politics had a strong influence.

The Biden/Harris administration is inextricably linked to the rise and fall of FTX, which turned out to be a money laundering operation that benefitted U.S. politicians – which is likely why regulators allowed it to operate for so long. The current administration is also implicated in the corrupt and possibly illegal attacks on banking institutions, dubbed Operation Chokepoint 2.0. A leading Democratic senator has attempted to build an “Anti-Crypto Army,” using militaristic language to threaten a $2.33 trillion industry. A deeply unpopular SEC chair, Gary Gensler, has intimidated and undermined leading financial innovators.

It is estimated that 26% of Americans own bitcoin – and that doesn’t include financial products like spot bitcoin ETFs. Being “fine with it” is just good politics. Trump’s comments were widely praised by the bitcoin and crypto communities, laying the groundwork for Trump to deliver his historic keynote speech at the Bitcoin Conference in the summer of 2024.

Along a typical person’s journey to understanding bitcoin, one arrives at a fork in the road. One path is to recognize the uniqueness of bitcoin; the other is to assume that the technologies that underlie bitcoin are the real innovation, and that new tokens, tools, DeFi platforms, and crypto projects are more important.

Taking the crypto path, Trump (and his sons) conceived and promoted a dubious DeFi product called World Liberty Financial. After a launch that could be characterized as somewhere between disappointing and disastrous, we haven’t heard much about it. The less said about that, the better.

Crypto projects like World Liberty Financial and other DeFi and NFT initiatives miss the forest for the trees. There may eventually be use cases for crypto that lead to healthy businesses with staying power. But, the real prize that Satoshi’s invention makes attainable is something far more profound: separation of money and state.

Over the past decade, a movement has arisen that heavily overlaps with Trump’s base of supporters (but extends beyond it) to reexamine the costs and

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