The art of predicting political outcomes, especially at the national level, is more nuanced than any science. Election results are influenced by a multitude of factors, from policy differences to campaign strategies, often involving thousands of data points. No single issue is the ultimate deciding factor. However, certain issues inevitably rise to the forefront.
My colleague Ruy Teixeira, for example, has presented a compelling argument that several cultural and policy issues contributed to a perceived electoral defeat for the Democratic party. Building upon that assessment, I propose that the Democratic Party’s approach to cryptocurrency played a significant, yet often overlooked, role in the recent election’s outcome. The narrative unfolds as follows, though I must admit my direct knowledge of the facts is limited.
It appears that Senator Elizabeth Warren (D-MA) secured the ability to appoint key officials at the Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB) in exchange for dropping out of the 2020 presidential race or endorsing Joe Biden shortly afterward. She demonstrated a preference for individuals like Gary Gensler and Rohit Chopra to head these agencies. It’s worth noting that Biden seemed to set aside some of his centrist tendencies by granting authority over various government agencies to individuals with a distinct left-leaning ideology. Over time, Gensler and Warren’s actions created a divide with the cryptocurrency industry and its community. This, in turn, amplified existing differences, moving the community away from its generally libertarian inclinations and arguably toward the Republican Party.
Given that this industry is founded on the development of new forms of currency, it should come as no surprise that it would have some. And members of the crypto community began investing greater political involvement. Fairshake, a crypto-aligned super PAC, emerged as a powerful force, raising over $200 million and spending $170 million in the 2024 election cycle. Donald Trump recognized an opportunity and seized it with enthusiasm. He attended prominent crypto conferences, making promises to a captivated audience. He also accepted campaign donations in cryptocurrency.
The Democratic Party, under the Harris campaign, attempted to soften its stance on crypto, suggesting a more moderate approach compared to the Biden administration, Warren, and Gensler. However, these attempts came too late. The cryptocurrency community was strongly aligned with Donald Trump. Individuals previously inclined toward a Trumpian stance became more assertive. That decision, despite warnings from CoinDesk’s Ben Schiller prior to the election, ultimately paid off. One of the most immediate outcomes was a surge in the price of Bitcoin, the most prominent cryptocurrency, to over $75,000 within 24 hours of the election results.
It is not unreasonable to expect a more favorable policy environment for crypto during the next four years. However, the impact wasn’t limited to the presidential election. Senator Sherrod Brown (D-OH), a fellow skeptic on the Warren team, encountered significant resistance from crypto supporters who backed his opponent, the cryptophile Bernie Moreno. This shift was instrumental in the Republican’s victory in the Senate.
Not all crypto professionals are automatically aligned with the Republican party. In Nevada’s Fourth District, Fairshake invested in support for a Democrat, Representative Steven Horsford, who has demonstrated a willingness to work with the crypto community. Given my understanding of the industry, this is not a surprise.
Two common aphorisms within the crypto community highlight key principles: “Not your keys, not your coins,” and “The best time to get into crypto is yesterday. The second-best time is today.” It’s my sincere hope that those on the losing side consider some introspection. We need a political landscape that allows for healthy competition, especially considering the influence from the new media environment and declining public trust in institutions. Along with the advice from Teixeira on broader political and cultural concerns, Democrats should end their current anti-crypto stance.
The underlying blockchain protocol fosters a capacity for globally administered community oversight, independent of governments and corporations. Bitcoin and other cryptocurrencies apply this technology to financial services, payments, and money. While I acknowledge the current style of many in the crypto community, reinforced by its support for Trump, I understand that the Democrats might not fully appreciate the full potential of the technology. But true policy professionals among the Democrats should be able to understand that its technological potential far outweighs any perceived negatives. Crypto presents a challenge to longstanding, often oligopolistic industries. The existing system enables a few to become extraordinarily wealthy. It is deeply ironic that Warren, in opposing crypto, may have inadvertently been protecting the interests of powerful figures in the financial world. And here is a second aphorism: “The enemy of my enemy is my friend.” At first, it might require some compromise to work with the crypto community. That is how unity between good policy and good politics can be found. Supporting the growth of crypto could be a path to improving electoral outcomes. “
