Can the decentralized vision still be achieved when cryptocurrencies become politicized?

Can decentralization be achieved if cryptocurrencies become politicized?

Whether the cryptocurrency industry desires to be the focus or not, digital assets have become one of the hot topics in the early stages of the 2024 US presidential election. The most notable new candidate even referenced Bitcoin in his campaign launch event as evidence of the current President Joe Biden’s mistakes.

In this election, the fiercest competition may arise among Republican challengers, with former President Donald Trump – as Biden’s main opponent – facing early threats from Florida Governor Ron DeSantis, who immediately utilized cryptocurrencies as a political abbreviation.

“The current regime is obviously hostile to Bitcoin,” DeSantis said on stage during his campaign tweet space, “Bitcoin poses a threat to them, and they are trying to eliminate it through regulations.”

If digital assets continue to be part of presidential politics, they are likely to be used as symbols to highlight perceived abuses by the federal government, according to industry insiders and political experts. However, this attention may not necessarily promote the policy progress desired by the cryptocurrency industry, as the industry awaits comprehensive regulations rather than political sentiment.

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So far, the Biden administration has been accused of suppressing emerging cryptocurrency companies and attempting to establish a central bank digital currency (CBDC) to surveil citizens, according to DeSantis and one of Biden’s challengers within his own party, Robert F. Kennedy, Jr.

For DeSantis, his pro-cryptocurrency stance also sets him apart from his main competitor Trump. The Republican frontrunner for the 2024 nomination has historically been rooted in distrust of digital assets, with Trump declaring in 2019 that he is “not a fan of Bitcoin and other cryptocurrencies because their value is highly volatile and based on thin air.” However, Trump has recently profited from his own series of non-fungible tokens (NFTs), so his position remains unclear.

Two weeks before DeSantis launched his campaign with the support of tech tycoon Elon Musk, he attempted to create a political moment by “banning” the US CBDC in Florida. Experts say that the commercial law used by Florida to oppose a potential digital dollar is not a genuine ban, but it may not matter for political supporters swayed by DeSantis’s enthusiasm.

“He seems to understand that privately developed solutions being created in the cryptocurrency market are likely to be superior, in part because they pose less of a threat to individual liberties of the public,” said Dave Weisberger, CEO of CoinRoutes, a trading technology startup from DeSantis’s hometown.

However, DeSantis’ defense of cryptocurrency is generally vague, and his comments seem to not acknowledge that these are online tools that can operate outside of the whims of sovereign nations. When he says that if the Democrats get another four years, they “might end up killing it,” this seems to imply that US lawmakers have more influence than they actually do, and that cryptocurrencies will not find a home in other global jurisdictions (such as Europe).

“It’s more about how he’s trying to shape himself as a new face,” said Ron Hammond, Director of Government Relations at the Washington Blockchain Association. “He’s trying to say ‘I’m the young guy here, trying to get things done.'”

Well-informed sources

Vivek Ramaswamy, a Republican opponent candidate, believes that the Florida governor is not knowledgeable about this topic. The biotech entrepreneur told CoinDesk that he supports Bitcoin because he views it as a “decentralized alternative” to the US dollar, improving America’s financial infrastructure by providing a “competitive source to the existing system.” He claims to have a better understanding of this than DeSantis.

Other notable Republican candidates, such as South Carolina Senator Tim Scott and former South Carolina governor Nikki Haley, are more reserved about this financial movement. Despite Scott having a seat on the Senate Banking Committee that could potentially decide the fate of US crypto, he takes a neutral stance, stating that lawmakers should take a “thoughtful, bipartisan, and balanced approach” towards the industry in America.

Among the candidates challenging Democratic frontrunner Biden, Kennedy – who also holds other positions aligned with the Republican party – strongly supports cryptocurrencies. “Crypto, led by Bitcoin, and other cryptotech is the major innovation engine,” Kennedy wrote in a tweet earlier this month. “The US government suppressing this industry and pushing innovation elsewhere is a mistake.”

DeSantis, the most crypto-friendly candidate among voters, still lags far behind Trump in early primary polls, but several candidates have expressed positive views on digital assets, which is seen as a positive sign for some in the industry. “We now have three presidential candidates, spanning two political parties, explicitly supporting the digital asset industry,” said Weisberger of CoinRoutes. “While Republicans are trying to make cryptocurrency a partisan issue, the industry itself doesn’t see it that way, which is why RFK Jr.’s support could also be significant.”

Biden is the only candidate with federal records on digital assets. So far, his administration has not formulated any major crypto policies, and the financial regulatory agencies he has chosen hold strong criticisms of the industry. His Securities and Exchange Commission Chairman, Gary Gensler, may be one of the most confrontational, as he has been battling with digital asset businesses in court and in proposals for his agency’s rules. Moreover, direct messages from Biden’s Treasury Department and his own White House have become increasingly skeptical of the industry.

Although this is not a campaign speech, Biden, who officially announced last month that he would strive to enter the White House again, mocked wealthy investors evading taxes on Twitter. But unlike political figures like Trump, it is still unclear how directly Biden is involved in his information dissemination.

CBDC (Central Bank Digital Currency) has become a target

Although the Biden administration is still in research mode on the CBDC issue and has not indicated whether the United States should have such a currency, this issue has become the sharpest political tool in the early presidential campaign so far. DeSantis accused the White House of pushing the digital dollar, which could not only become a tool for government surveillance, but also a financial weapon for direct intervention against political enemies. Republicans in the United States consider the dissatisfaction of Canadian truck drivers as a warning case of government behavior getting out of control, as local authorities froze the encrypted wallet of the truck driver leading protests against travel restrictions related to the new crown epidemic. DeSantis and other US politicians have said that what happened in Canada could be repeated here. “There is a certain degree of fear-mongering on the CBDC issue, portraying it as a huge, terrible, and terrifying government seeking to control your daily life and track you,” said Owen Tedford, an analyst at Beacon Policy Advisors. “Therefore, the opposition of these Republicans is not really related to the basic facts, and there is no need to be based on facts, because CBDC does not exist yet.”

Criticism of the non-existent digital dollar is becoming increasingly popular and has spawned multiple legislative efforts to prevent CBDC from being halted before it starts. Political observers expect this struggle, which has been one-sided so far, to continue in the presidential campaign. “I think CBDC will be mentioned more,” said Hammond of the Blockchain Association, adding that there are many points on this issue, and Republicans can find drama in it, from the implications of their large government to the fact that major global competitors of the United States have taken this path. “This is a combination of China, privacy, and distrust of the government.”

Cryptocurrency factor

In addition to the issue of government-issued assets, most people do not believe that cryptocurrencies will have a significant impact on the election. “Unless there is a big market boom or another industry collapse on the scale of FTX, I don’t think cryptocurrencies will play a big role in the 2020 race,” said Tedford of Beacon. “I think candidates are more likely to use them as tools to showcase other viewpoints.” Hammond agrees that the industry is unlikely to play a significant role. The story continues…

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