Biden’s Futile Attempts To Win Back The Hearts Of Long-Gone Crypto Scammers Won’t Work. They Will, However, Allow The Democratic Party And Its Base To Get Fleeced.
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The Biden Campaign has slogged through a historically rough couple of weeks. Many party leaders have publicly called on Biden to leave the ticket, rumors abound about who is asking Biden to step aside behind closed doors, and he has struggled to put together a public performance that could silence his critics. However, the Biden campaign has come up with a plan to reverse the stagnation; reversing the Republican drift of cryptocurrency millionaires. The tradeoff? Enshrining a hands-off approach to an industry rife with financial graft, fraud and even environmental destruction.
Last week, Politico reported a key Biden ally, White House senior adviser Anita Dunn, joined Congressional Democrats led by Rep. Ro Khanna for a meeting with cryptocurrency leaders, in an attempt to court the industry to join (or at least less actively oppose) his campaign. The conversation, which included prominent crypto ally Sen. Kirsten Gillibrand; industry representatives including Mark Cuban (a longtime crypto investor and vocal critic of SEC Chair Gary Genlser) and representatives from crypto firms Coinbase, Andreessen Horowitz and Ripple; was seemingly an attempt by Democrats to slow the crypto industry’s drift rightward. But the strategy is doomed. All it can deliver is more customers for cryptocurrency firms. It will not deliver the industry’s support.
Since the downfall of the ostensibly liberal Sam Bankman-Fried (SBF), the cryptocurrency industry has pivoted away from his strategy of courting both Democratic and Republican lawmakers in the hopes of shaping their inevitable crypto regulatory framework, and moved to the right. This is a logical reaction. SBF’s gamble was predicated on building influence in the Democratic Party so he would be able to shape any future cryptocurrency legislation. In 2020 and 2021 this seemed to make sense — Democrats controlled the House and would soon control the White House and the Senate. As the party more inclined to support business regulation, it made sense to expect them to pass some form of cryptocurrency regulation, or at least to begin to enforce existing financial and securities law. But Democrats did not pass overarching crypto legislation after Biden took the White House. And Securities and Exchange Commission Chair Gary Gensler’s attempts to rein in the industry with existing authority have been met with pushback from some Democrats whom the crypto lobby has essentially bought off.
Now Republicans are on the rise. They control the House of Representatives and are favored to win back the Senate come November. Donald Trump was leading President Biden in the polls headed into the RNC and now expects to see his lead grow as a result of sympathetic voters reacting to the attempted assassination on Saturday. The orchestrator of the crypto influence campaign in the Democratic Party is in jail. With seemingly no progress to be made on cryptocurrency legislation in the remaining time of Joe Biden’s first term, crypto has jumped ship entirely, aligning themselves with the logical party for an industry seeking to permanently go unsupervised; the Republican Party.
This support for Republicans is not entirely new. SBF himself donated millions of dollars to Republican campaign efforts, and his co-CEO at FTX, Ryan Salame also donated millions to the conservative cause, mirroring the established Wall Street practice of working both parties. However, SBF’s donations were done silently. He sought to hide these efforts for fear of alienating the Democrats they needed to pass a sweetheart crypto regulatory framework. With Democratic support no longer necessary, the new crypto playbook is one of unabashed support for Donald Trump and the Republican Party – and the Republican platform is a reflection of the ties forged between the party and the crypto industry over the past couple of years.
The 2024 Republican Platform pledges to “end Democrats’ unlawful and unAmerican Crypto crackdown”, oppose the creation of a central bank digital currency (which could cut into crypto firms’ lucrative profits) and “defend the right to mine Bitcoin.” This is just the beginning. Project 2025 includes language that calls on the SEC and Commodity Futures Trading Commission to promulgate a rule that would see crypto regulation handed over to the statutorily weaker and understaffed CFTC – a similar policy to the one pushed by SBF before his downfall. The Republican Party has embraced crypto in a way Democrats cannot match.
Matching the policy commitments are the Republican Party’s leadership. Donald Trump’s platform isn’t the only outward show of support he’s made to the cryptocurrency industry. He is scheduled to speak at a bitcoin conference later in July, and his VP pick is Sen. JD Vance – who has been writing crypto-friendly legislation as recently as this month and has previously disclosed crypto holdings of over $100,000. Vance also used to work as a venture capitalist at Mithril Capital, Peter Thiel’s VC fund that has invested in crypto firms including stablecoin issuer Paxos. Byron Donalds, a second-term Florida Congressman who has built a powerful constituency by being one of a few diehard crypto proponents in Congress, was another rumored VP pick.
This hasn’t gone unnoticed by crypto proponents. Huge crypto and “meme coin” investor Elon Musk recently donated to a pro-Trump SuperPAC, just months after Bloomberg reported that he had “counseled” the former president on cryptocurrency. Likewise, the Winklevoss twins each donated $1 million to Trump’s reelection as a result of Biden’s “war on crypto”. One must wonder if part of their anger stems from NY Attorney General Letitia James’ suit against the twins for their role in an alleged crypto fraud totalling more than $3 billion. Other supporters of Trump include venture capitalist, and Ro Khanna’s own supporter, David Sacks of the All In Podcast. Sacks, who claims to be a recent convert to the Trump side, has cited his crypto stance as among the reasons why he prefers the now-convicted felon to Joe Biden.
These oligarchs are not going to be won over by a late-game reversal by Biden that somewhat weakens his regulatory stance towards crypto. They seek complete impunity for the industry that they have built on the premise of no regulation.
But the Biden campaign should not be worried about the electoral impact of these oligarch’s endorsements. Despite pumping money into the presidential election and congressional races around the country, crypto as an issue is unimportant to the American electorate. As Molly White recently wrote in Citations Needed, “advertisements run by these [crypto PACs] committees rarely mention cryptocurrency or blockchains at all, or even technology or finance more broadly.” Kowtowing to cryptocurrency interests wouldn’t provide Biden with a new popular policy issue to campaign on, it would just further enrich a select few cryptocurrency investors and executives.
To quote my colleague Max Moran’s writing on Biden’s attempts to court oligarchic billionaires, “Whatever his ideology, clearly Biden does think the business world should have at least some set of checks on its power sometimes. That is enough for the billionaire class to prefer the fascist.” Cryptocurrency executives behave no differently. The Democratic Party represents a hedge against unfettered cryptocurrency criminality. That might as well be an existential threat to the industry and the wealth of its insiders.
No attempts to court crypto leaders will disabuse them of the correct assessment that the lawless ideology of the modern Republican Party is the correct vehicle for their industry’s ambitions. By backing off of cryptocurrency Biden will not secure the support of the industry. He will however, expose millions more Americans to the risk posed by an unregulated financial market that has preyed upon the poor and minority communities. Joe Biden’s campaign needs to take a step back and ask themselves what they will actually gain from exposing their electoral base to massive financial risk. After all, the cost of attempting to win over the support of the crypto industry might just be another Silicon Valley Bank crisis, the next big FTX fraud, or a crash that disproportionately harms Black Americans.