This United States election year is shaping up to be one of the most volatile in recent memory, and crypto is stoking the excitement even more.
Unlike previous presidential election cycles, this one actually features politicians taking a stand on cryptocurrency and blockchain issues. Donald Trump has already promised to be the “crypto president,” while on the Democratic side, there seems to be a greater willingness to support crypto reform legislation.
On June 24, Carole House, author of President Joe Biden’s executive order to establish a regulatory framework for cryptocurrencies in the U.S., left her position as a crypto adviser at the New York Department of Financial Services to rejoin the White House in a move that some believe noteworthy.
What might be driving this new embrace of cryptocurrencies by U.S. politicians?
Strategic thinking politicians have realized that cryptocurrency owners comprise at least 15% to 20% of the American public today, and they “are attempting to win their votes by appealing to their economic interests,” Grant Ferguson, an instructor in the political science department at Texas Christian University, told Cointelegraph, “just as they do when they talk about 401ks and other kinds of assets.” He added:
“Both Republicans, like Donald Trump, and Democrats, like Governor Jared Polis of Colorado, see the potential in cryptocurrency, which is a far more valuable asset class than it was five years ago.”
The “reality” that is crypto
“Any candidate running for any office in our nation must now face and address the reality that is cryptocurrency,” Moe Vela, an adviser to Unicoin, an asset-backed cryptocurrency, and a former senior White House adviser under two Democratic administrations, told Cointelegraph:
“It is here to stay, and its impact and role in our financial, investment and economic sectors can never again be overlooked or ignored. Either candidate for president will do so at their own political risk.”
Rehiring House is arguably a sign that the White House is adjusting to this reality. House is a subject matter expert, and “an SME is usually brought in when their expertise is required,” said Vela, adding:
“I believe this does signal at least a strong recognition by the Biden administration as to the importance of digital assets and its impact on our economy.”
Now a “normal” industry
When politicians crowd on the bandwagon, mainstream acceptance can’t be far behind. The industry is also better organized than in the previous presidential election year of 2020, and perhaps even in the 2022 midterm elections, David Primo, professor of political science at the University of Rochester, told Cointelegraph, adding:
“Crypto is now characterized by well-funded trade groups, politically engaged executives, a big lobbying presence, and a concerted effort to get the industry’s message out. It looks in many ways like a ‘normal’ industry, and politicians are responsive to well-organized interest groups.”
But there may be even more at play in this particular election cycle. Crypto-user demographics are aligning with those of highly sought “swing voters.” According to Ferguson:
“Our research also shows that crypto investors have some distinctive political attitudes that are particularly relevant this [election] year.”
Ferguson, along with co-authors Kathryn Haglin and Soren Jordan, recently published research in American Politics Research that suggests “the demographics and opinions of the Americans who own crypto are a key reason why more politicians are trying to appeal to these potential voters,” he told Cointelegraph.
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The typical crypto investor in the U.S. is a young, centrist (politically) male — often Latino or African-American — who is likely to own stocks, too. This individual is “probably a little more open to trying new technology and taking risks than others,” explained Ferguson, though not necessarily more educated than the average American. In short, this user “sounds like a swing voter.”
This prototypical user could vote for either party’s presidential candidate or even a third-party candidate. Their position isn’t frozen, and this crypto user’s vote is still up for grabs.
Aren’t politicians flighty?
Still, how durable is this latest “crush” on the part of U.S. office seekers? It isn’t inconceivable, after all, that Trump and others could pivot again between now and November, especially if crypto prices sink.
“If there’s a big dip in crypto prices, it could affect the positions that Trump and Biden and others take,” acknowledges Ferguson. On the other hand, “If their internal polling shows that winning over crypto owners helps get them another percent or two in swing states, they may stick with pro-cryptocurrency policies through November and beyond.”
The Trump campaign, for its part, clearly recognizes the political advantages of winning over crypto voters, but Trump’s track record “should be a clear warning to take his newfound love of crypto with a grain of salt,” commented Vela. “If crypto loses its luster between now and the election, he will once again have foul things to say about Bitcoin and the crypto sector.”
Donald Trump says “If you’re in favor of Crypto, you better vote for Trump” pic.twitter.com/5AGYIfsNOg
— Randi Hipper (@missteencrypto) May 9, 2024
The fact that crypto can be used to fund campaigns could make the relationship more lasting, however. “So long as crypto has any value, American politicians will be eager to scoop it up,”
Ciara Torres-Spelliscy, a professor of law at Stetson University College of Law and author of Corporatocracy, told Cointelegraph.
Just as politicians will accept in-kind contributions, like the use of a printing press or free bunting to decorate a stage, they will also accept crypto, continued Torres-Spelliscy. “Trump is using some of his campaign funds to pay his lawyers. That need for money — fiat or crypto — won’t be going away anytime soon.”
Wagging the dog?
This new crypto attachment has some interesting variations. Some claim that lawmakers this election season have even gone so far as to “wag the dog” — using crypto as a diversionary tactic. It may be coincidental that Representative Matt Gaetz, who is being investigated by a House ethics committee for sexual misconduct and illicit drug use, just recently discovered the virtues of Bitcoin.
So, are some U.S. politicians also using crypto as a distraction this election season?
“I feel strongly that any lawmaker who attempts to use cryptocurrency to create a diversion, to divide, to scare or to intimidate voters will pay the price at the ballot box,” responded Vela. It’s a sign that that politician is simply out of touch with the public.
“An elected official who fails to realize that crypto was created because a large swath of citizens felt disenfranchised and unseen by the current financial system does so at their own political peril,” continued Vela.
“Politicians, especially some of the older ones, are desperate to appeal to younger voters who are a growing part of the American electorate,” added Torres-Spelliscy. “Touting crypto could be a cynical way to appeal to Gen Z voters.”
Locking in electoral gains?
Overall, will the upcoming U.S. elections prove consequential for the global future of crypto and blockchain technology?
The winners of the presidency and Congress will shape the future of law in many aspects, Torres-Spelliscy told Cointelegraph. “A unified Congress and presidency under a single party could pass all sorts of laws that either enable or stifle new technologies like crypto.”
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“If presidential and congressional candidates win their elections in part because of cryptocurrency owners, added Ferguson, “they may want to lock in those electoral gains by adopting policies favorable to cryptocurrency investors and technology entrepreneurs.”
What’s going on may not necessarily be transactional or short-term, however.
All in all, “politicians and candidates of all stripes are jumping on the crypto bandwagon because they fundamentally understand that it is more than an alternative and viable financial system; it’s arguably a ‘movement.’” said Vela. “It’s millions of people who felt left out of the current system and who are screaming out for a system that is accessible, digital and inclusive.”
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