Digital Money Demystified Fintech Trend Report
July 19, 2024
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Crypto Clash 2024: Why Democrats Are Losing the Fight Over Financial Freedom & How To Turn It Around
By Tonya M. Evans, Penn State Dickinson Law Professor, Speaker, Consultant & Author of Digital Money Demystified
July 19, 2024
Are Democrats losing the battle over crypto as a democratizing force for financial freedom?
As we head into the 2024 election, the political landscape is heating up, and cryptocurrency is at the forefront of many debates. While crypto is deeply political, it's not inherently partisan. However, current policies might be undermining the very freedoms that crypto promises.
Cryptocurrency offers a secure, peer-to-peer form of digital cash, changing how we do business, send money, invest, and fund political campaigns. Ideally, it shouldn't be a partisan issue. Yet, here we are, in the middle of a presidential election cycle filled with partisan battles, and crypto is one of the hot topics.
Both Republican presidential nominee Donald Trump and his running mate, J.D. Vance, have publicly backed crypto. In May 2024, Trump announced he’d accept Bitcoin, Ethereum, and Dogecoin for political contributions and would support crypto-friendly policies if elected. This is a significant shift from his time in office when he was twice impeached and convicted on 34 counts of falsifying business records. Back then, he expressed concerns about the lack of regulation and potential for illicit activities like money laundering and terrorism financing.
The Biden administration’s approach to cryptocurrency regulation, especially through "Chokepoint 2.0," has not been favorable. The harm done to investors and industry innovators by the SEC under Gary Gensler and by banking regulators cutting off banking access to the industry is massive. As discussed in my testimony before the House Financial Services Sub-Committee on Digital Assets, the administration’s piecemeal regulatory actions have created uncertainty and stifled innovation, driving innovation offshore and costing the U.S. its leadership in the digital asset market.
On the other hand, Trump’s pro-crypto stance has garnered significant financial support from the crypto industry, including endorsements from figures like Elon Musk and organizations like Coinbase's "Stand with Crypto" initiative. This support shows the industry's desire for regulatory clarity and a favorable environment for innovation.
However, Ethereum co-founder Vitalik Buterin has cautioned against supporting political candidates solely based on their stance on cryptocurrencies. In a recent blog post, he emphasized that being “pro-crypto” goes beyond financial liberty and includes broader values and freedoms, such as free and private communications, privacy-friendly digital identity, freedom of thought, and high-quality access to information. Buterin highlighted that authoritarian regimes and power-seeking politicians often view crypto as a means for control, supporting it only when it serves their interests, such as evading sanctions, and opposing it when it threatens their power. He cited modern Russia as an example, where the government uses crypto to bypass international restrictions while cracking down on citizens’ financial freedoms.
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, we must 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.
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 the impending approval of the first Ethereum ETFs mark significant steps towards integrating digital assets into the mainstream financial system, promoting financial inclusion.
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