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Time is running out for Democrats on cryptocurrencies
Last week, cryptocurrencies made headlines again. Donald Trump declared himself a unabashed supporter as he unveils a new line of mug shot NFTs at Mar-a-Lago. On the same day, the Biden administration announced it would veto efforts to remedy a widely loathed situation SEC accounting bulletin which prevents the custody of cryptocurrencies by many companies.
The stories highlight how cryptocurrencies have become yet another battleground in this year’s presidential election. But for many Democrats, the Biden administration’s hard line has seemed as tragicomic as watching Sideshow Bob step on dozens of rakes, over and over again.
At the rate things are going, cryptocurrency owners could be the straw that breaks Biden’s campaign’s back. According to the paradigm survey Since March, while Biden has lost 44%-43% among cryptocurrency owners, he has lost 48-39% among the 20% of voters who own cryptocurrencies. And that’s a change from 2020, when cryptocurrency owners recall voting for Biden by 43%-39%.
As Democrats, we would like to see Biden give people in the cryptocurrency world a reason to believe in him. According to surveys conducted by both our organizations, approximately 20% of registered voters own cryptocurrencies. Cryptocurrency owners are young, but they are all sorts of partisans. About 20% of Democrats own cryptocurrencies, about 20% of Republicans own cryptocurrencies, and about 20% of Independents own cryptocurrencies. People vote (or don’t vote) for many reasons, but being anti-crypto is interpreted as synonymous with anti-innovation, anti-technology and anti-change. The wounds to the campaign are self-inflicted.
Cryptocurrencies should not be a partisan issue. No technology should be. The idea of being pro- or anti-cryptocurrency should be as ridiculous as describing yourself as pro-computers or anti-toasters. Yet under this administration, we, lifelong progressives who have a healthy skepticism about technology, have watched with growing concern as our party has cast the entire digital assets industry as evil. Nowhere is this clearer than with the SEC under the chairmanship of Gary Gensler. The chairman of the SEC testified told Congress early in his term that cryptocurrency legislation was needed to give the SEC additional critical authority to regulate the industry. Over the next year, he scrapped that sensible approach in favor of a relentless fight with his fellow regulators attacking the industry in printing and engaging in a “sinners in the hands of an angry god” anti-space campaign.
With some notable exceptions, the agency has closed its doors to the entire industry and made it clear that it can do nothing to work with Chairman Gensler. The President has provided no path to compliance for the industry, sending a singular message to cryptocurrencies: I demand your destruction.
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This mentality has not bled the entire Administration dry. There are some agencies and regulators who have not positioned themselves with such hostility. But there was also little significant resistance at the top when it came to curbing Gensler’s antics. Indeed, the White House statement calling for a veto on efforts to change SAB 121 (the rules that severely limit who can store cryptocurrencies) was seen by many as a vote of support for the President’s entire approach to cryptocurrencies .
Fortunately, some Democrats in Congress have tried to create space from the SEC. Notably, 21 people voted to overturn SAB121, showing that it’s not just industry players who perceive political bias here.
We are both progressives in the cryptocurrency space and think the party is making a mistake if it lets a few loud voices dictate policy at the party level. Sheila entered blockchain after a decade in nonprofit law and civic technology, due to concerns about big data monopolies and inequality in the movement of money across borders. Justin entered the world of cryptocurrency after working in and out of government because he provides an open space to build technology without the control of a single entity. The idea of a decentralized platform owned by tens of millions of people is a respite from our current world of both technology and finance, full of closed spaces governed like feudal fiefdoms.
While the headlines focus on the worst actors, the reality is that the industry is not a monolith. Responsible companies have been calling for regulation for years, even though they know that regulation will create potentially complicated and costly compliance requirements. But Democratic leaders have largely ignored them. Why? When did Democrats start to be afraid of legislating and regulating? Why do Democrats choose to pursue aggressive approaches in a conservative justice system? We’re backwards.
It’s not too late to change course. Democrats don’t need to hang a giant “I 💙Crypto” sign on the DNC to appeal to cryptocurrency owners; simply saying that they think cryptocurrencies are an innovation that requires reasonable regulation would help immensely. But if Democrats don’t at least try to appeal to this voting bloc, they risk sending them back to Donald Trump. In an important election like this, with Biden below in polls, Democrats should be trying to bring crypto voters into the tent, not recklessly chase them away.
This story was originally featured on Fortune.com