Crypto Clash 2024: Why Democrats Are Losing the Fight Over Financial Freedom Web3 & How To Turn It Around

By Tonya M. Evans, Penn State Dickinson Law Professor, Speaker, Consultant & Author of Digital Money Demystified.

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Access to the secure peer-to-peer form of digital cash known as cryptocurrency-- as an alternative means of engaging in commerce, sending remittances, investing in capital assets (including the newly launched bitcoin--and sound-to-be launched Ethereum--exchange-traded funds), and even fundraising for political campaigns, is not a partisan issue; or at least it shouldn’t be. But here we are in the throes of a United States presidential election cycle fraught with hyper-partisan fervor on a range of issues, including crypto. So, while not partisan, the issue of crypto is deeply political.

Both the Republican presidential nominee, Donald Trump, and his recently announced vice-presidential running mate, James David "J.D." Vance, have affirmed publicly their pro-crypto stance. In fact, in May 2024, Trump announced he would accept bitcoin, Ethereum and Dogecoin as political contributions and would advocate for crypto industry-friendly policies, if elected. This despite a policy turnabout from his time in office, when the twice-impeached former President convicted on 34 counts of falsifying business records in a New York State Supreme Court jury trial, expressed concerns about the lack of regulation and potential for illicit activities, such as money laundering and terrorism financing.

He shared this skepticism on July 11, 2017 on Twitter (now X.com),

“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. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity...”

Crypto industry Trump supporters are quick, however, to link these views with advice from Trump’s Treasury Secretary, Steve Mnuchin, whose stance might be partly driven by the desire to maintain the status quo in the traditional banking and finance system.

Even when it appears his views began to shift in 2019, Trump did not introduce any significant crypto policy initiatives. Nevertheless, the crypto community, reeling from its own need to clean up its public perception in the wake of the crypto contagion years thanks to the likes of 3 Arrows Capital and Sam Bankman-Fried (see my commentary on MSNBC Host, Chris Hayes' podcast), gravitated to this elusive brass ring of favorable executive branch policies spearheaded by administrative agencies.

Words Matter

We often use the words ‘politics’ and ‘politician’ without fully understanding their definitions. Politics can be broadly defined as the activities associated with governance, including the debate between parties having power and the allocation of resources. It involves the mechanisms of control and the distribution of benefits and privileges within a community or society.

A politician is someone empowered to allocate resources on behalf of their constituents. Their role includes creating and implementing policies that reflect the needs and interests of the public they serve. They hold a significant position in balancing power, resources, and societal needs. These definitions make clear that allocation of access to cryptocurrencies through legislation and the administration of those laws (politics) at the hands of politicians (controllers of the resources) is deeply political.

And nothing is more political than financial resources as a pathway to freedom in the emerging digital asset economy in Web3 and beyond.

Crypto Under the Political Lens

Cryptocurrencies like Bitcoin are inherently political because they challenge traditional financial systems and the governmental control associated with them. They offer an alternative to centralized monetary systems, promoting a decentralized and transparent financial ecosystem. This characteristic makes them a tool for self-sovereign agency over money, movement, property, and body—an ultimate expression of financial freedom, as discussed in Digital Money Demystified.

Biden Administration and "Chokepoint 2.0"

The Biden administration's approach to cryptocurrency regulation, notably through "Chokepoint 2.0," has not done the administration any favors. In fact, the harm done to investors and industry innovators by the Securities and Exchange Commission (SEC) done under the failed leadership of Gary Gensler and done by banking regulators by cutting off banking access to the industry is incalculable. As discussed in my testimony before the House Financial Services Sub-Committee on Digital Asset, Financial Technology & Inclusion, the administration's piecemeal regulatory actions, led by agencies like the SEC, have intentionally created uncertainty and stifled innovation. This approach has driven innovation offshore, depriving the U.S. of leadership in the burgeoning digital asset market.

Decidedly undemocratic.

Trump's Pro-Crypto Stance

In contrast, the current GOP presidential nominee has adopted a pro-crypto stance. As a result, his campaign has received significant financial support from the crypto industry, including endorsements from influential figures like Elon Musk, grassroots organizations like Coinbase's "Stand with Crypto" initiative and the FairShake PAC. This support highlights the industry's desire for regulatory clarity and a favorable environment for innovation by any means necessary; even if it means being a single issue voter that ushers in a second Trump presidency that promises to implement the Cliff’s Notes version of Project 2025 called Agenda 47.

Dangers of Project 2025 and Its Impact on Crypto Inclusion and Access

Project 2025, a 920-page policy blueprint created by the Heritage Foundation, outlines a far-right Christian vision for a potential second Trump administration. This document poses significant threats to various aspects of American society, including LGBTQ+ rights, women's rights, education, the federal workforce, immigration, environmental protection, healthcare, government transparency, cultural diversity, and the consolidation of power. Project 2025 poses significant dangers to American democracy, individual rights, and social progress, with potentially far-reaching and devastating consequences.

While cryptocurrencies like bitcoin are inherently political due to their challenge to traditional financial systems, they are not partisan. They aim to provide financial autonomy and inclusion, democratizing access to financial opportunities. However, the politicization of crypto, especially under policies outlined in Project 2025, endangers the very freedoms that crypto promises.

If Project 2025's vision is implemented, the rollback of protections for marginalized groups, weakening of social programs, reduction in educational opportunities, and consolidation of power could create an environment where only the privileged have true access to the benefits of cryptocurrencies. The plan’s emphasis on a narrow, exclusionary societal framework undermines the inclusive, decentralized ethos of the crypto movement. In essence, the policies of Project 2025 could stifle the potential of cryptocurrencies to foster economic freedom and inclusion, making them tools of privilege rather than vehicles for widespread financial empowerment.

Hyper-Partisan Tenure and Democratic Voters

The hyper-partisan tenor of Trump's campaign may alienate some Democratic voters. Cryptocurrencies often get a bad rap as tools for "dark web money scams" and other illicit activities. This negative perception, when coupled with GOP policies and rhetoric could hinder broader acceptance among those who are more skeptical about the technology's benefits and security. Democrats need to seize the opportunity to revisit their regulation-by-enforcement approach with a both/and strategy of the right calibration of protection and

Despite these challenges, it is crucial to convey that Bitcoin and other cryptographically secured forms of money are indeed the people's money. They embody the principles of decentralization and self-sovereignty, providing individuals with unprecedented control over their financial affairs. This aspect aligns with the broader political objective of financial empowerment and inclusion, transcending partisan divides.

Bitcoin and Economic Freedom

Bitcoin's role in promoting economic freedom cannot be overstated. It offers a viable alternative for those in countries with unstable currencies, as seen in Nigeria's case, where the Naira's depreciation prompted a shift towards Bitcoin as a more stable store of value. Bitcoin's fixed supply and decentralized nature make it resilient to inflation and political interference, providing a hedge against economic instability.

Bottom Line

To harness the full potential of cryptocurrencies, there is a pressing need for clear and inclusive regulation. Such a framework should protect investors while fostering innovation, ensuring that the U.S. remains a leader in the digital asset economy. The approval of Bitcoin ETFs by the SEC (and impending approval of the first Ethereum ETFs, marks a significant step towards integrating digital assets into the mainstream financial system, offering an SEC-approved path for investment and promoting financial inclusion.

Bitcoin and other cryptocurrencies are not inherently partisan; they are tools for political and economic transformation. They represent a shift towards financial self-sovereignty and empowerment, transcending traditional political divides. As we move forward, it is imperative to advocate for regulatory clarity and education, ensuring that the benefits of this technology are accessible to all, promoting a more inclusive and equitable financial future. And also that the message of sovereign money is not intercepted out by any single political messenger on any side of the aisle or branch of government.

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