Crypto gets quick return on Trump investment after campaign funding

Crypto executives, companies and investors get an early return on theirs investment in Donald Trump.

After pouring tens of millions of dollars into Trump’s 2024 presidential campaign, the crypto industry was paid handsomely during his first week in the White House.

“I don’t think they could have imagined a better outcome than what they just got in the last 48 hours,” Benchmark’s Bill Gurley, known for early bet on Uberhe told CNBC “Closing Bell” on Friday. Gurley said that while tech’s newfound influence in Washington could be detrimental to some parts of the startup world, “it’s clearly good for crypto.”

The industry’s support for Trump is built on the Republican leader’s promise to stop government crackdowns on cryptocurrencies and implement regulations favorable to those seeking to develop new types of payment technologies while easing restrictions on cryptocurrency investment.

Industry heavyweights as Coinbase CEO Brian Armstrong and Binance CEO Richard Teng hail the start of a new era.

“You have to remember, for the last four years, we really felt like we were being attacked by this administration,” Armstrong told CNBC at the annual World Economic Forum in Davos, Switzerland. Armstrong criticized the Biden White House for trying to “weaponize the lack of clarity in the rules,” punishing even companies that were trying to be helpful.

“There were some bad actors, to be fair,” Armstrong said. “But they even really tried to go after good actors, I mean, like us.” Coinbase was one of the leading corporate donors in the 2024 election cycle.

Bitcoin it hit a record high of around $109,000 on Monday and hovered near $105,000 by the end of the week. That’s more than 50% more than Trump’s election victory in early November.

The 48-hour stretch mentioned by Gurley included executive order signed by Trump on Thursday to promote the adoption of digital assets in the US

Trump called on members of the Treasury Department, the SEC and the Commodity Trading Commission to join forces on a task force to assess the potential hoarding of government-seized cryptocurrencies.

The order highlighted other key priorities, such as protecting bitcoin miners and software developers from what the president called “persecution” and promoting stablecoins pegged to the US dollar, while banning the digital dollar from the Federal Reserve.

Venture capitalist David Sacks, who Trump bugged to be the White House’s AI and crypto czar, joined the president in the Oval Office to sign the order.

Later on Thursday, the SEC made a significant announcement, retreating an accounting rule that made institutional adoption of cryptocurrency difficult by forcing banks to treat bitcoin and other tokens as a liability on their balance sheets.

The rule, known as SAB 121, was introduced in 2022 and subjected digital assets to strict capital requirements. It also increased the financial and regulatory risks of offering cryptocurrency custody services and increased the operational costs of financial institutions.

Efforts to overturn SAB 121 received bipartisan support in Congress last year. But then President Biden vetoed the proposed legislation, leaving the rule intact, further discouraging banks from adopting digital assets beyond trading derivatives and offering exchange-traded funds to asset management clients.

The move was celebrated by SEC Commissioner Hester Peirce, who on Tuesday he was selected to lead a new “crypto task force” within the agency.

“Bye, bye SAB 121! It wasn’t fun,” wrote ua post on X.

Prior to the SEC’s announcement, Goldman Sachs CEO David Solomon told CNBC in Davos said that from a regulatory perspective, a bank cannot own bitcoin, and that it will revisit the issue if the rules change. Executive directors Morgan Stanley and Bank of America he also said President Trump’s pro-crypto tone could reshape their plans and potentially lead to an expanded digital offering.

A few days earlier, Gary Gensler stepped down from his role as chairman of the SEC. Gensler, who has emerged as an opponent of the crypto industry, defended the rule as necessary to protect investors in the event of crypto companies going bankrupt. Trump’s pick to succeed Gensler is a former SEC commissioner Paul Atkinswho is currently the CEO of Patomak Global Partners.

On Tuesdayon his second day in office, Trump granted a full pardon to Ross Ulbricht, the founder of Silk Road. Ulbricht, 40, has been serving a life sentence without the possibility of parole since 2015, after being convicted in federal court on seven charges which include distribution of narcotics and conspiracy to hack computers.

Silk Road operated from 2011 to 2013, serving as a dark web marketplace where users bought and sold a mix of contraband, including illegal narcotics like heroin. Platform enabled more than 200 million dollars in salesaccording to federal prosecutors, and was linked to the deaths of at least six people.

At its height, Silk Road functioned as a global drug bazaar, with transactions mostly taking place in bitcoinmaking it one of the earliest large-scale applications of cryptocurrency. Prosecutors later argued that the anonymity afforded by bitcoin was instrumental in allowing Silk Road vendors to conceal their identities.

Ulbricht has become something of a cult hero in the crypto community, and “Free Ross” the movement gained resonance among conservative media personalities and politicians.

“I just called the mother of Ross William Ulbricht to tell her that in honor of her and the Libertarian Movement, which has so strongly supported me, it has been my pleasure to sign a full and unconditional pardon for her son, Ross,” Trump wrote in a post on Truth Social on Tuesday.

Changpeng Zhao, billionaire co-founder and former CEO of Binance, commented on X with a clapping emoticon after the pardon was announced. Zhao was convicted to four months in prison in April, after pleading guilty to facilitating money laundering at his crypto exchange.

Most importantly, the president was having fun in a part of the market notorious for fraud. Last weekend, while crypto leaders and members of Trump’s family and inner circle partied at the Crypto ball in Washington, the $TRUMP meme coin has taken off online.

Then came the $MELANIA coin. Taken together, the Trump family has made billions of dollars on paper by owning properties created out of thin air. Crypto enthusiasts worry that this is a troubling sign of Trump’s true intent and that it damages the credibility of an industry trying to prove its legitimacy.

“Call me old-fashioned, but I think presidents should focus on running the country, not launching scam tokens,” wrote Nic Carter of Castle Island Ventures in publish on X.

The website for $TRUMP he says 80% of the supply is held by the Trump Organization and affiliates.

Lawmakers also have objections.

Sen. Elizabeth Warren and Rep. Jake Auchincloss, both Democrats from Massachusetts, have raised questions about the first couple using their positions to enrich themselves, along with the potential for “carpet-pulling” scams.

“We are writing with deep concern about President Trump and First Lady Melania Trump’s decision to launch two meme coins, $TRUMP and $MELANIA, which allow them to profit tremendously from his presidency,” the couple said in a letter obtained by CNBC.com. “These coins do not create new, faster, cheaper and more secure payment rails. These coins do not help people borrow more affordably. They do not in any way improve the financial system for consumers.”

$TRUMP is now trading below $30, down more than 50% from its peak shortly after launch. The $MELANIA token is down more than 80% from its peak and is currently trading below $2.50.

Meme Coins are subject to a multi-year allocation schedule, ensuring that most tokens cannot be liquidated at once. No selling any tokens, ex Coinbase executive and crypto analyst Conor Grogan estimates that Trump’s team generated $58 million in trading fees on the first day.

Skepticism is not limited to coin memes.

In Trump’s executive order on Thursday, the president failed to direct the US to start buying bitcoin directly and hold it as a reserve.

Ahead of the order, Binance CEO Richard Teng he told CNBC in Davos that he predicted the US would establish a strategic bitcoin reserve. Circle CEO Jeremy Allaire called it “prudent” for central banks to hold bitcoin reserves.

Trump floated the idea during the campaign, suggesting that the U.S. bitcoin reserve could be backed by crypto assets seized from hackers and fraud rings, a proposal that is still under consideration.

But in his 1,300-word executive order on Thursday, Trump didn’t just avoid referring to the bitcoin reserve. The word bitcoin was nowhere to be found.

— CNBC’s Ryan Browne contributed to this report.