Cryptocurrency is now a hot topic in United States politics. It wasn’t always like this, however, especially since just a small percentage of U.S. politicians seem to have a baseline understanding of digital currencies.
Nonetheless, it’s now a wedge issue poised to morph into a destructive political football destined to occupy a new, uncomfortable space in the consistently devolving culture war. Although this is certainly uninspiring news for common sense political discourse in the United States, it remains to be determined how this will affect the cryptocurrency ecosystem.
Let’s start with how we got here.
A few legislators in Congress have been quietly working on common-sense cryptocurrency regulation for the last couple of years. These informed Democrats and Republicans in the U.S. House of Representatives and Senate have thoughtfully taken up the matter and drafted legislative measures to define cryptocurrencies, hedge investor risk, defend against fraud and integrate digital currency into a long-established centralized system. Those waiting for lawmakers on either side of the aisle to embrace total decentralization will be waiting a very long time. Nobody in the 117th Congress is considering this, and it’s unlikely anyone in the 118th, 119th or 120th will either.
Until recently, cryptocurrency and blockchain matters weren’t discussed in the halls of Congress, just like they weren’t coffee table issues for the majority of disinterested American citizens. They weren’t political wedge issues and were never topics of debate between candidates Donald Trump and Joe Biden in the 2020 presidential campaign. Most Americans simply didn’t know or didn’t care about cryptocurrency.
Things changed for several reasons, not the least of which were the Twitter proclivities of billionaire and Dogecoin enthusiast Elon Musk. On April 25, Musk tweeted: “Am hosting SNL on May 8.” The price of Dogecoin closed at $0.27 that day. The following day, NBC confirmed Musk’s announcement, and the memecoin closed at $0.32.
Soon after, Shark Tank star and billionaire Dallas Mavericks owner Mark Cuban announced that BitPay handles “Mavs Doge sales,” also saying on the The Ellen DeGeneres Show: “At the Mavs, we sell a lot of merchandise for Dogecoin, and you should look at it for the Ellen Shop.”
At that point, crypto newbies eager to make a quick buck clamored to open accounts on welcoming trading platforms like Robinhood and cryptocurrency exchanges like Coinbase. DOGE started buzzing, inexperienced speculators flocked, HODLer’s held on, and just before Musk’s opening monologue, Dogecoin topped out at nearly $0.75. Musk’s performance was uninspiring, and Crypto Twitter was unimpressed. During a skit later in the show, Musk’s character said Dogecoin was a “hustle.”
Dogecoin began its precipitous descent. FOMO, as it so often does, led to FUD — sometimes sad, desperately delusional FUD. Two of Washington, DC’s most prolific, competitive politicians took notice and quickly took up positions on either side of the cryptocurrency regulatory debate.
Cue Senator Warren
Musk’s apparent market manipulation and his Saturday Night Live appearance weren’t the only motivators for Senator Elizabeth Warren to speak out about cryptocurrency. She certainly must have noticed the market’s seesaw-like reaction to China banning cryptocurrency transactions for financial institutions on May 18.
Warren has also expressed concerns about token volatility in the past, criticizing Robinhood’s checkered history of alleged cheating — having frozen out traders from selling Dogecoin when it was tanking on May 8, just after Musk’s SNL appearance. On June 9, Warren talked to Bloomberg Technology about crypto, telling the publication: “It’s the Wild West out there, and it makes it not a good way to buy and sell things and not a good investment — and an environmental disaster.”
Bitcoin mining consumes roughly the same amount of electricity as Washington state—putting pressure on our power grids and worsening the #ClimateCrisis. We need to protect our planet and crack down on environmentally wasteful crypto mining practices. https://t.co/ChKYcD82gH
— Elizabeth Warren (@SenWarren) September 7, 2021
Next to Senator Bernie Sanders, Warren is the most influential progressive voice in the upper house. Although the senator is unable to set policy — only moderate legislation can pass this Senate — she’s very influential, and her positions are echoed by a sizable portion of the Democratic base. Those constituents who know little or nothing about cryptocurrency will likely accept her rhetoric as fully accurate.
Warren believes that cryptocurrency is a “lousy investment” for the average person. It really doesn’t matter that she and other legislators could change the taxable status of crypto for purchasing goods with the stroke of a pen, or that cryptocurrency is a good investment for those willing and interested in educating themselves, or that crypto volatility has no impact on the uninvested. Her message to the base is simple, clear and effective: Cryptocurrency is bad for the little guy. It’s good for the rich. It’s just another tool to be used to stick it to the middle class.
Senator Cruz, always looking for an opportunity to stir the pot
Senator Ted Cruz may not be the most influential voice on the conservative side of the aisle, but he’s still a formidable politician. It’s unclear if he took up the cryptocurrency matter in reaction to Senator Warren or he simply stumbled upon an opportunity to hammer Democrats. Cruz is a long-term political opportunist who is smart and talented enough to know how to expand the base, yet he’s often ignorant about the issues that he’s for or against.
On June 9, Cruz told Fox News host Sean Hannity that he doesn’t understand Bitcoin: “It is a new cryptocurrency. To be honest, I don’t fully understand it. […] It has upside, but be careful.” He also said that people are going to use Bitcoin as a “hedge” against inflation because President Biden is proposing “$7 trillion in new spending.”
Cruz is right that the U.S. is currently experiencing inflation, although it’s unrelated to unallocated federal infrastructure dollars. It’s the result of several factors, including COVID-19-related supply chain delays. Cruz is also correct that Bitcoin is a cryptocurrency, but it’s not new. The senator certainly didn’t understand cryptocurrency at the time of the Hannity interview but still managed to present himself as an informed voice — as the conservative anti-Warren cryptocurrency hero with a political ax to grind.
