We’re heading into an election year and crypto’s moment on the campaign circuit seems imminent.
On March 20, Florida Gov. Ron DeSantis, a Republican who will likely seek the GOP nomination for president, announced legislation to prohibit the use of a federally controlled central bank digital currency, or CBDC, in the state. Soon after, Sen. Ted Cruz (R-Texas) introduced legislation to prohibit the Federal Reserve from developing a direct-to-consumer CBDC that could be used as a financial surveillance tool by the federal government with two other Republican co-sponsors.
This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
Then, last week, Sen. Elizabeth Warren (D-Mass.) tweeted from her campaign account that she was building an “Anti-crypto Army.”
So if you were under any suspicion that crypto wasn’t political, then I’m sure that suspicion is now shattered. Crypto is politicized.
DeSantis made it about political parties with his office announcing that the legislation is an attempt to protect “Floridians from the Biden administration’s weaponization of the financial sector through a CBDC.” He said that “a centralized bank digital currency is about surveillance and control.”
Cruz didn’t make it about political parties and instead leaned into the importance of financial privacy and the global dominance of the U.S. dollar as a matter of national security. This itself is interesting because that’s exactly the point at the center of Warren’s anti-crypto stance, which includes new anti-money-laundering bills and tamping down on sanctions evasion.
Hence the perceived effectiveness of Warren’s anti-crypto army. She has allies across the aisle like Sen. Roger Marshall (R-Kansas) making her anti-crypto campaign less of a left-leaning campaign and more of a this-is-for-the-good-of-the-country-leaning campaign.
See also: 4 Reasons Why US Lawmakers Shouldn't Back Sen. Warren's Latest Crypto Bill | Opinion
Warren will likely get other Republicans on board with this type of campaign because it is being touted as a measure to prevent money laundering and it’s probably pretty difficult to be a member of Congress and appear to support money laundering.
Where crypto’s politicization will get more interesting is specifically on the topic of CBDCs and Bitcoin in the shadow of the current banking crisis.
CBDCs and invasion of privacy
Warren is pro-CBDC, saying last year in an interview with NBC’s Chuck Todd:
“Instead of bitcoin, we could be talking about digital currency, that’s something totally different, because that’s a government-backed electronic transfer … but that has something that backs it up.” She added later, “If you think: We can improve that in a digital world? The answer is, sure you could, but in that case, let’s do a CBDC.”
If history is a guide, if CBDCs enter the political discourse this coming election cycle, it will become a red-blue issue. Conservatives have already begun coming out as anti-CBDC because its introduction could allow the government to surveille and potentially censor regular, law-abiding Americans. Liberals could then align as pro-CBDC because private (meaning non-government) cryptocurrencies enable money laundering and don’t offer the same government-assured backstop a CBDC would.
Of course, the conversation around CBDCs should be bipartisan: If a CBDC enables unfettered surveillance of financial transactions, then all Americans should make it a priority to block that. Privacy is incredibly important.
Bitcoin and crypto in the shadow of bank failures
When it comes to bitcoin and crypto in the context of the current trouble in the banking industry, there is another battle line forming, although it’s a bit more hazy than the CBDC line. As banks have failed, Bitcoin has emerged as a potential avenue to opt out of the current system, which was spurred on by the Federal Reserve’s mismanagement of the economy.
What’s more, Cruz himself likes Bitcoin (and thinks the Left hates it) because it cannot be controlled by the long arm of a liberal government. But if Bitcoin is a means to opt out of the banking system and out of the U.S. dollar system, that could be viewed as anti-American. What a bind!
Really, the crypto question politicians will answer on the campaign trail is: “What do we use digital currencies for?”
See also: Elizabeth Warren's New Financial Surveillance Bill Is a Disaster | Opinion
The moment a Democrat talks about a CBDC or some sort of U.S. government digital currency the Republicans will call Democrats anti-American because they want to surveille regular Americans.
The moment a Republican says something positive about bitcoin the Democrats will say that it is un-American since it threatens U.S. dollar hegemony and dominance and existence.
It probably won’t be as black and white as that, but it’s election season. Take your side, America!