Trump "has no intention of repairing" his relationship with Musk: Regulation in the crypto world and political struggles are intensifying.

Since June 2025, the American political scene has been in turmoil, with Trump and Musk, once allies, completely falling out and publicly confronting each other, causing global market fluctuations. At the same time, Trump is accelerating the appointment of the chairman of The Federal Reserve (FED) and facing regulatory pressure from the Democrats regarding his Crypto Assets investments.

Trump warns Musk: If you fund the Democratic Party, you will “pay the price”.

On June 7, U.S. President Donald Trump made it clear in an interview that his relationship with Elon Musk is beyond repair. According to Jinjidata, Trump warned that if Musk funds Democratic candidates opposing the Republican budget proposal, he will face “very serious consequences.” He stated directly, “If he does this, he will pay the price for it.” Trump further expressed, “I think this relationship is over.”

The catalyst for this public rift stemmed from Musk’s fierce criticism of Trump’s heavily promoted “Big Beautiful Bill.” The bill passed in the House in May by a narrow vote, including a $4 trillion tax cut plan, increased defense spending, and immigration enforcement funding, but is expected to increase the federal deficit by $2.4 trillion over the next decade.

Elon Musk posted multiple times on the social platform X, calling the bill “absurd and ridiculous, filled with political manipulation,” pushing the United States toward an “unsustainable debt abyss.” He even initiated a poll asking whether a new political party should be formed, attracting 120 million participants within 24 hours, with a support rate of up to 81%.

Musk’s fierce reaction is not unfounded. The “Big and Beautiful Act” removes the tax credits for electric vehicles, which poses a direct impact on Tesla. On June 5, Tesla’s stock price plummeted by 14%, with a market value evaporating by over $150 billion. Trump countered: Musk had long been aware of the details of the bill, yet after the electric vehicle subsidies were canceled, he “suddenly turned against it” and threatened to terminate SpaceX’s government contracts, claiming this could “save billions of dollars.” Musk announced that if the contracts were canceled, SpaceX would retire the “Dragon spacecraft,” which would severely damage the U.S. manned spaceflight program and force NASA to rely on Russian spacecraft while paying a $2.3 billion penalty.

This war of words not only exposes the sharp contrast in the personalities of the two, “Trump demands absolute loyalty, while Musk considers himself a ‘disruptor’,” but also reflects the internal divisions within the Republican Party. Analysts point out that Musk’s tech empire relies on a global supply chain and federal contracts, while Trump needs to maintain the interests of traditional energy and military-industrial groups, making the structural contradictions between the two hard to reconcile.

The Federal Reserve (FED) Chair Appointment Suspense: Rate Cut Expectations Heat Up

On June 6, Trump revealed at a press conference that the results of the appointment of the new chairman of The Federal Reserve (FED) would be announced “soon” and stated that he already had a good idea of the candidates. He added that a good chairman of The Federal Reserve (FED) would lower interest rates.

It is worth noting that Trump’s monetary policy tendencies stand in stark contrast to Musk’s fiscal conservatism. During Musk’s tenure at the Department of Government Efficiency (DOGE), he advocated for federal spending cuts but only achieved a reduction of $170 billion, far below his $1 trillion target. Trump’s calls for interest rate cuts may further exacerbate deficit pressures.

Market speculation about the new chair of The Federal Reserve (FED) is focused on pro-business individuals. Kevin Warsh, who was nearly selected as the chair of The Federal Reserve (FED), has drawn attention for his investment in the blockchain project Basis.

The Democratic Party targets Trump’s “Crypto Assets crime”

According to crypto journalist Eleanor Terrett, the House Financial Services Committee will hold a hearing next week (June 16) to discuss the “Stop Trump from Engaging in Cryptocurrency Act” (HR 3573) and the “CLARITY Act” (HR 3633). Led by Democratic Congresswoman Maxine Waters, the hearing aims to examine the potential risks of Trump and his family’s profits from meme coins like “Trump Coin” ($Trump), referring to it as “crypto crime.”

On January 18, Trump launched “Trump Coin,” managed by his CIC Digital LLC. Within hours of its issuance, the market value soared to $5.5 billion, with 80% of the tokens held by entities related to Trump. Democratic lawmakers Elizabeth Warren and Jack O’Connor wrote to the Office of Government Ethics, warning that the transaction might violate the constitutional compensation clause and “open the door” for foreign influence on U.S. policy.

The hearing will also focus on the CLARITY Act, which aims to establish a regulatory framework for digital assets, but Democrats believe it may “loosen the reins” on Trump’s crypto investments. Previously, Senate Democrats rejected a stablecoin bill supported by the crypto industry on May 8, declining to include provisions that would prohibit Trump and other high officials from profiting from crypto investments.

Extended analysis: The triangular game of power, capital, and policy

The rift between Trump and Musk is not only a personal feud but also a reflection of the clash between capital and political power. Musk, as Trump’s largest donor for the 2024 campaign (with nearly $300 million in contributions), was once seen as a core ally. However, his reform efforts in the Department of Efficiency faced obstacles, and the impact of the “Big and Beautiful Act” on his business interests prompted him to adopt an adversarial stance.

In the field of Crypto Assets, Trump’s “pro-coin” policy is closely tied to his personal investments. He promised to make the United States the “Crypto Assets capital” and appointed pro-crypto Paul Atkins as SEC Chairman and David Sacks as crypto envoy, attempting to promote industry development through legislative and executive means. However, the regulatory pressure from the Democratic Party may limit his policy space, especially in the context of the advancement of the “Stop Trump from Participating in Crypto Assets Act.”

The appointment of the Chairman of The Federal Reserve (FED) will be a key point in Trump’s second term. The interest rate cut policy may stimulate short-term economic growth but could also exacerbate inflation and deficit risks, standing in opposition to Musk’s fiscal conservatism. Behind this game is Trump’s attempt to balance the complex considerations of economic stimulus, partisan interests, and personal wealth.