Rapture #111: The Love Affair Between Elephants and Crypto
Politics has been on my mind! With 2022 set to be a fireworks year here in the US politically for crypto, I thought I would take a moment to address an emerging trend I am seeing in the political arena.
Just as a reference point, the following house representatives and senators are the most supportive of crypto:
House of Representatives
Rep. Tom Emmer (R-MN)
Rep. Warren Davidson (R-OH)
Rep. Anthony Gonzalez (R-OH)
Rep. Ted Budd (R-NC)
Rep. Patrick McHenry (R-NC)
Rep. Darren Soto (D-FL)
Rep. Ro Khanna (D-CA)
Rep. Richie Torres (D-NY)
Senate
Sen. Cynthia Lummis (R-WY)
Sen. Pat Toomey (R-PA)
Sen. Portman (R-OH)
Sen. Ted Cruz (R-TX)
Sen. Wyden (D-OR)
Republicans Generally like Crypto
Out of the 13 legislators I listed above, 9, or nearly 70%, are republicans. Furthermore, some of the most significant leaders in the Republican party, such as Senator Ted Cruz, have come out in support of crypto.
Republicans supporting crypto makes sense, as the conservatives are known to be far more pro free markets than the Democrats.
Interestingly, the republican legislators who support crypto split on which digital assets they support. For example, Senator Lummis is a renowned Bitcoin maximalist and is thus not as sympathetic to the causes of DeFi, Web 3.0, or other primarily non-BTC angles.
Representative Emmer and Representative Warren Davidson are generally pro all crypto, while Anthony Gonzalez is particularly interested in the growth of DeFi.
All that being said, the US’ previous president Donald Trump has voiced concerns over the sustainability of crypto and believes they may hurt the US dollar, though his son-in-law Jared Kushner is rumored to be a significant supporter of the asset class.
It will be interesting to see if more republicans hop on the crypto bandwagon as the mid-term fights heat up and the crypto lobby gets moving in full force.
Democrats are Lukewarm at Best
The Democrats, on the other hand, are not quite as positive about crypto overall. While 4 out of the 13 legislators listed are Democrats, some of the most vocal critics of crypto come from the left. Senator Elizabeth Warren, for example, repeatedly has called on regulators to step up their efforts in the crypto markets. Furthermore, Democrat and SEC Chairman Gary Gensler is a renowned crypto critic, as is Biden’s rumored OCC (Office of the Comptroller of Currency) nominee Mehra Baradaran.
Democrats being concerned about crypto makes sense ideologically, as crypto without a doubt is rampant with fraud and it is easy for the average user to be exploited. The test in prod (i.e. launch a product without robust testing and completely disregard users potentially losing money) culture really does not benefit new users who are interested in learning more about the space safely.
Furthermore, the most fascinating, and well-researched, critique I have read about some of the shenaniganry in the space (besides the gadfly Chris Blec) comes from Alexis Goldstein, who has been testifying in congress about some of the risks of crypto and works for an incredibly progressive think tank called Open Markets.
Without a doubt, Democrats are becoming more acquainted with the dynamics of crypto and are increasingly skeptical about the benefits the industry has to offer.
Takeaway
I predict that crypto will continue to be politicized upon party lines, with Republicans on average being for more lenient towards the emergent industry and Democrats being more skeptical. Considering regulatory action is on the horizon, it will be important to monitor how both parties treat crypto, and which party has control of the government.