Why Democrats Should Oppose Crypto

The unfortunate rise (and subsequent collapse) of cryptocurrency has presented itself as both an evocative symbol of faux technological progress and wrapped in political corruption. Digital assets were sold to the public as a utopian vision wherein centralized banking is obsolete, financial inclusion is ubiquitous, and individuals reign supreme over their own monetary transactions. However, the reality is far more disqueiting; they have become nothing but a new form of gambling and grift for the post-truth social media era. They are essentially going through exactly the same legitimization process that multilevel marketing scams went through in the 1970s, although this time the Democratic Party still has time to get on the right side of history.

At its core, the crypto philosophy represents a fundamental rejection of the principles underpinning little-L liberalism. Crypto is is a libertarian project fueled by the economic inequality and precarity of thirty years of neoliberal policy and synthesized with the financialization of populist rage. The movement portends to champions individual freedom and decentralization, but in reality, it undermines the very institutions and social contracts that safeguard personal liberties in liberal democracies. By promoting a system that prioritizes unregulated financial transactions and pseudonymous interactions, crypto enthusiasts inadvertently create an environment ripe for exploitation and instability. This approach is both precarious, as it lacks the safeguards and accountability mechanisms present in traditional financial systems, and perilously deceptive when marketed as a path to financial liberation. In reality, it often serves to concentrate wealth and power in the hands of a new technocratic elite, while leaving the majority of participants vulnerable to market volatility and sophisticated financial manipulation. The promise of crypto as a great equalizer thus reveals itself as a mirage, masking a potentially more insidious form of economic disparity and social fragmentation.

The primary allure of cryptocurrency resides in its purported democratizing potential. By circumventing traditional banking infrastructure, cryptocurrencies ostensibly democratize access to financial resources and facilitate economic participation on a previously unattainable scale. This narrative of financial emancipation contains logical contradictions because crypto assets are a zero-sum speculative trade, not a new form of money or store of value. There is simply no fundamental economic value to crypto assets can be used outside of what is effectively a new form of unregulated gambling. Crypto does not grow the economy, it siphons wealth from the poor to the rich—that's what it was designed to do. Democrats should invest their time and policy in helping industries which grow the pie of the economy, not which create more rent-seeking and zero-sum gambling schemes.

From the perspective of Democratic values—which ought to emphasize social responsibility, economic equity, and institutional integrity—the unfettered laissez-faire ethos of the crypto movement is an anathema. Regulation exists for a reason, to ensure that markets are fair, transparent, and accountable and that investors are protected from fraud and manipulation. Cryptocurrency’s illiberality is most conspicuous in its facilitation of an unregulated market where nefarious actors thrive in defiance of the rule of law. This anarchic milieu, sheltered by opportunistic gulf states like United Arab Emirates and tax shelters like the British Virgin Islands, foster a breeding ground for illicit activities such as money laundering, tax evasion, pig butchering, and financing of criminal enterprises. Crypto directly undermines our sanctions regime, and is at odds with the foreign policy and geopolitical interests of the United States by providing a haven for illicit financial transactions for our adversaries. Crypto is the tool of the autocrat, the strongman, the kleptocrat, and the criminal.

The adoption and promotion of cryptocurrency entail an inherent endorsement of fiscal policies that exacerbate economic instability. Cryptocurrencies, by their very design, are prone to extreme volatility. Such volatility is antithetical to the ethos of economic stability that Democrats champion. The capricious nature of crypto markets can foment widespread financial precariousness, particularly for economically vulnerable populations enticed by the prospect of substantial returns. Thus, the promise of financial liberation morphs insidiously into a specter of economic marginalization, indulged in the guise of populist engagement. It is no surprise that crypto has become a cultural touchstone for barstool conservatives, the MAGA crowd, and QAnon conspiracy theorists. For years FOX News and it's internet-dwelling offhosts have been hawking gold coins, diet pills and financial doomerism as a perpetual scam engine to bring money into the pockets of grifters of those who can't make a respectable living in polite society. Crypto is simply the next iteration of these schemes. It will come as shock to no one that Donald Trump is hawking narcicisitic NFTs. All of these ideologies revel in anti-establishment, anti-state, and anti-democratic sentiment and crypto is the perfect vehicle to channel that populist rage and dollars into a speculative bubble. Thus the crypto bubble inflates and sustains itself on the back of conspiracy theory, financial doomerism, financial illiteracy the seemingly endless supply of converts into the social media grift economy.

Even more disturbingly, the crypto movement fosters anarchic tendencies through the financialization of populist rage. The rise of cryptocurrency is intrinsically tied to an emergent form of libertarian populism that corrosively undermines democratic institutions. The crypto market, operating outside conventional regulatory mechanisms, champions an ideology of radical individualism that erodes collective social norms and responsibilities. This financialization of populist sentiment is particularly perilous in its potential to sow discord and engender societal fragmentation. Crypto enthusiasts frequently frame their mission in adversarial terms against 'the establishment'—vilifying centralized banking systems and, by extension, the democratic governance structures that oversee them. Through this adversarial framing, cryptocurrency advocates engender a toxic narrative of distrust and disillusionment with governmental institutions. It is a childish and puerile anti-system politics that aims only to destroy, never to build or reform—the opposite of what Democrats should strive for. The crypto sentiment of populist rage cannot be channeled into constructive reform; instead it leads into fractious libertarianism that eschews cooperation for confrontation, engendering civil fragmentation over communal progress.

Even more disconcertingly, the demographic most susceptible to such populist narratives comprises those already disenfranchised by prevailing economic systems—individuals experiencing economic precarity and social alienation. Crypto-evangelists prey upon these vulnerabilities, presenting participation in the crypto market as a panacea for disenfranchisement. However, as scholarly inquiry into the dynamics of populist movements elucidates, the purported liberation through crypto involvement is a mirage; crypto is a form of predatory inclusion which wraps itself in the cloak of financial liberation as a means to siphon wealth from a disenfranchised populace. These individuals often become ensnared in the volatile throes of speculative mania, gambling addiction, rampant scams and financial precarity exacerbating their existing vulnerabilities.

Critics may argue that opposing cryptocurrency stifles innovation and economic freedom. However, this perspective fails to recognize the fundamental difference between genuine financial innovation and empty speculative bubbles built around dead-end technologies. True financial innovation should aim to solve real-world problems, increase economic efficiency, and promote inclusive growth—goals that cryptocurrency has consistently failed to achieve for more than a decade. Instead, the crypto industry has primarily excelled at creating complex financial instruments that obfuscate risk and exploit regulatory loopholes. By opposing crypto, Democrats are not standing against progress, but rather safeguarding the integrity of our financial system and protecting vulnerable individuals from predatory schemes. Moreover, the resources and talent currently absorbed by the crypto industry could be redirected towards developing technologies that address pressing societal challenges, such as climate change, healthcare accessibility, or sustainable energy. By taking a firm stance against cryptocurrency, Democrats are championing a vision of technological advancement that aligns with public interest and long-term societal well-being, rather than short-term speculative gains for a privileged few.

Put simply, crypto is a way to exploit the precariat, it is a wealth transfer from the poor to the rich, from those who fail to distinguish between gambling and investment, and from those are economically illiterate to those who operate digital casinos for their own gain. Public policy on crypto should be rooted in a recognition of its fundamental incompatibility with capital markets and the principles of social justice, economic stability, and democratic governance. The environmental ramifications of crypto mining, the perpetuation of wealth inequality, and the undermining of governmental oversight collectively delineate a trajectory towards socio-economic anarchy—a future starkly opposed to democratic ideals. Crypto populism, alongside the rise of authoritarian demagogues like Putin, Orban, and Trump, must be opposed at all costs.

Proponents of crypto, particularly those with libertarian leanings in Silicon Valley, may be inadvertently advancing interests that align with those of autocratic regimes, such as Putin's Russia, which benefit from weakened financial regulations and oversight. The goals of autocratic strongmen like Putin are to sow discord, dissent, and weaken our democratic institutions. They must be opposed, their agenda must be stopped, and their influence must be curtailed. We must use the levers of the Executive Branch, SEC, IRS, DOJ, and OCC to regulate crypto out of existence, firewall it off from the financial system, and choke it off from inflows of new victims and new capital. We must lean on our allies across Europe and the G20 to do the same.

The Democratic party must fundamentally oppose crypto because it is a direct assault on the very foundation of our republic, the dollar, the rules based international order, and liberal democracy itself.