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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:

• Kamala Harris is quietly assembling her advisory team. We break down the members’ complicated histories with crypto. 

• Outflows from Grayscale’s ETHE finally paused. Here’s what that means (or doesn’t).

• The crypto industry has more cash to dole out. Ben covers the latest endorsements from super PACs.

Team Harris has some crypto frenemies 

As Vice President Kamala Harris prepares to accept the Democratic nomination next week at the DNC, she has cautiously started to unveil her platform.

We now have a better sense of where Harris stands on some economic and social issues, and we know who is helping her craft these views. 

But crypto, unsurprisingly, is a topic the campaign has yet to touch, at least publicly. 

Here’s what we know about Harris’s platform: 

• She wants to increase abortion access. 

• She wants to ban assault-style weapons. 

• She thinks tips should be exempt from federal tax (as does Donald Trump), but only for lower- and middle-income earners. 

• She’s backing away from some of the more left-leaning promises she made in 2020 when she ran for president (such as decriminalizing illegal border crossing and banning fracking). 

Right now, that’s really all we know. A broad idea of “bringing up the middle class” has also been a strong undertone in most of Harris’s speeches since she entered the race three weeks ago, but we don’t have specifics just yet. 

She’s also focused on sharing personal details with voters, as is her VP pick Tim Walz — mostly in the form of memes. (Her Gen Z social media team hopes they can ride the meme wave all the way to the White House, but that’s a topic for another newsletter.) 

While we know little about Harris’s plans for the crypto industry, we do know who she’s added to her advisory team. 

Brian Nelson 

Nelson, former undersecretary at the Treasury’s Office of Terrorism and Financial Intelligence, left his federal agency job last month to join Team Harris. Under Nelson, the Treasury department created a proposal to label crypto mixers as a “primary money laundering concern.” 

While the designation spooked the industry, Nelson, to his credit, has never shied away from his critics. He defended his policies on stage at the Consensus conference in June, adding the agency is “committed” to furthering “stakeholder engagement.” 

“From our perspective, we believe that there is a difference between sort of obfuscation and anonymity enhancing services and those that support privacy,” Nelson said at Consensus. “And we, of course, totally recognize that, in the context of public blockchains, which provides information about financial transactions, that there would be a desire to have a certain degree of privacy around those financial transactions.”

Nelson in February also said he believed claims that Hamas had raised “millions” in crypto were vastly inflated. 

“We also assess that terrorists still prefer, frankly, to use traditional products and services, but this is something that we’re obviously monitoring very closely,” he said at a Congressional hearing.  

Brian Deese 

Team Harris’s second Brian, according to NBC, is decidedly more skeptical about crypto. Deese, a former director of President Biden’s National Economic Council, penned the infamous (among crypto circles, at least) White House blog post in January 2023 addressing the administration’s plans to “mitigate crypto risks.” 

While the post acknowledged digital assets could “offer ways to make payments faster, cheaper and safer,” companies in the space tend to “ignore applicable financial regulations and basic risk controls.” 

There is speculation that Deese played a role in the so-called Operation Choke Point 2.0 effort to block crypto companies from the banking system. But it appears Deese has not made any statements about crypto banking directly. 

Harris’s team says more policy updates are coming soon, so keep your eyes peeled.

— Casey Wagner

The price level BTC reached Tuesday afternoon, just after 1:30 pm ET. This marked a roughly 3.7% jump from 24 hours prior.

Overall, the asset was up about 14% over the past seven days, as of that time. If you recall, BTC’s price dipped below $50,000 last week. 

Predictions as to where we go from here vary (as mentioned in yesterday’s newsletter). Ultimately though, US monetary policy and the election are poised to be key medium-term price drivers.

Crypto’s prominence within capital markets is growing day by day. 

The On The Margin Roundup crew will hit the stage at Permissionless III synthesizing crypto market conditions within the broader macroeconomic environment. 

Grayscale’s higher-priced ETH ETF saw a notable net flow figure on Monday: zero. 

The crypto asset manager’s Grayscale Ethereum Trust (ETHE) had bled assets during its first 14 days on the market, according to Farside Investors data — with net outflows over that span totaling nearly $2.3 billion.

The run of cash exiting the vehicle was expected given the much lower price points of competing offerings, including Grayscale’s own Ethereum Mini Trust spin-off.

But zero ETHE outflows (albeit for just a day) are a bit of a surprise, as the Grayscale Bitcoin Trust (GBTC) had 78 straight trading days of net outflows after converting to an ETF. 

About $900 million of investor capital has entered BlackRock’s spot ether ETF, while ETH products by Fidelity and Bitwise have each eclipsed the $300 million net inflow mark. Still, ETHE’s heavy outflows have kept the US spot ether ETF category net flow total in the red, at roughly $400 million. 

Point being that ETHE outflows abating would change the segment’s collective net flow trajectory.

But Neena Mishra, director of ETF research at Zacks Investment Research, said she’s not reading too much into ETHE’s single day of zero flows.   

“Last week was extraordinarily volatile for cryptocurrencies, with ether at one point experiencing its steepest plunge since 2021 before rebounding,” she told Blockworks. “It's likely that some investors are simply waiting for more market stability before making their moves.”

So it’s quite possible these outflows will continue as they have, largely mirroring those of GBTC over the longer-term, Mishra explained.

That said, ETHE simply doesn’t have as much capital to bleed. While GBTC net outflows stand at nearly $19.5 billion to date, there’s only about $5 billion of investor capital left in Grayscale’s ether trust.

— Ben Strack

There’s a lot of money in politics, we know. Less than three months ahead of the US presidential election, and a bunch keeps flowing toward candidates deemed to be pro-crypto.

Crypto-focused Super PAC Fairshake said Tuesday its affiliate political action committees — Defend American Jobs and Protect Progress — were securing TV airtime for three candidates. 

The biggest beneficiary? Bernie Moreno, who in March won the Republican US Senate primary for Ohio. Defend American Jobs has reserved $12 million worth of spots for the Trump-backed candidate, who is set to face off against incumbent Sen. Sherrod Brown, a vocal crypto critic. 

While 12 Democrats in May joined GOP members to vote for Joint Resolution 109 — a bill to overturn the SEC’s SAB 121 — Brown was not one of them. Though the Senate passed the resolution, Biden vetoed it.

On the flip side, Moreno said in a July X post that he would “lead the fight to defend crypto in the US Senate.”

Others getting financial backing include Reps. Ruben Gallego, D-Ariz., and Elisa Slotkin, D-Mich. Protect Progress has secured $3 million of ad time for each of them.

The flow of cash toward these political hopefuls comes after Fairshake labeled nine Dems and nine Republicans it would support (also via TV ads) in their quest for seats in the House of Reps. That financial support collectively totaled $25 million.

Fairshake previously spent $2 million campaigning against Rep. Jamaal Bowman, D-N.Y., and another $10 million in opposition of California Democrat Katie Porter. Both lost their primaries.

While forces beyond crypto super PAC backing of course come into play in these races, the track record suggests this financial support is worth paying attention to.

— Ben Strack

• Coinbase’s services are now available to Hawaii residents, the crypto exchange said Tuesday. This expansion comes after regulatory changes made by the Hawaii Department of Commerce and Consumer Affairs Division of Financial Institutions, the company added. COIN shares were up nearly 4% on the day, as of 2 pm ET. 

• While bitcoin’s price had risen from 24 hours ago (as of writing), ETH’s price declined slightly over that span — sitting at roughly $2,715 at 2 pm ET. 

• Today marks the 50th edition of the On the Margin newsletter. We look forward to bringing many more to you. Thanks for reading!