Sen. Warren’s ‘Anti-Crypto Army’ is just the beginning of Crypto’s politicization

We’re heading into an election year and the crypto moment on the campaign circuit seems imminent.

On March 20, Florida Governor Ron DeSantis (R-Fl.) announced legislation banning the use of a federally controlled central bank digital currency (CBDC) in the state. Soon after, Senator Ted Cruz (R-Texas) introduced legislation to prohibit the Federal Reserve from developing a direct-to-consumer CBDC that could be used as an economic monitoring tool by the federal government along with two other Republican co-sponsors.

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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 the suspicion that crypto was not political, then I’m sure that suspicion is now shattered. Crypto is politicized.

Governor DeSantis wrote it about political parties with his office announcing that the legislation is an effort to protect “Floridians from the Biden administration’s weaponization of the financial sector through a CBDC.” He said “a centralized [sic] bank digital currency is about monitoring and control.”

Senator Cruz did not make it about political parties, but instead leaned into the importance of financial privacy and the global dominance of the US dollar as a matter of national security. This in itself is interesting because it is exactly the point of Senator Warren’s anti-crypto stance, which includes new anti-money laundering laws and scaling back 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) who are making her anti-crypto campaign less of a leftist campaign and more of a this-is-for-the-country-to-lean campaign.

Senator Warren is likely to get other Republicans on board with this type of campaign since it is positioned around preventing money laundering, and it is probably quite difficult to be a member of Congress and appear to support money laundering.

Where crypto’s politicization will become more interesting is specifically on the topic of CBDC and Bitcoin in the shadow of the current banking crisis.

“Instead of Bitcoin, we can talk about digital currency, it’s something completely different, because it’s a state-backed electronic transfer … but it has something to back it up.” Added later, “If you’re thinking: We can improve it in a digital world? The answer is certainly you can, but in that case let’s do a CBDC.

If history is any guide, if CBDCs enter the political discourse this coming election cycle, it will be a red-blue affair. Conservatives have already begun to come out as anti-CBDC because its introduction could allow the government to monitor and potentially censor ordinary, law-abiding Americans. Liberals may then align themselves as pro-CBDC because private (meaning non-governmental) cryptocurrencies enable money laundering and do not offer the same government-proof backstop that CBDCs would.

Of course, the conversation around CBDCs should be twofold: If a CBDC enables unfettered monitoring of financial transactions, all Americans should prioritize blocking it. Privacy is incredibly important.

When it comes to Bitcoin and crypto in the context of the current troubles in the banking industry, there is another battle line forming, albeit a bit more nebulous 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 by the Federal Reserve’s mismanagement of the economy.

Also, Senator Cruz himself like Bitcoin (and think the left hates it) because it cannot be controlled by the long arm of a liberal government. But if Bitcoin is a means of opting out of the banking system and the US dollar system, it could be seen as anti-American. What a bond!

The real crypto question politicians will be answering on the campaign trail is, “What do we use digital currencies for?”

The moment a Democrat talks about a CBDC or some kind of digital currency from the US government, the Republicans will call the Democrats anti-American because they want to surveil ordinary Americans.

The moment a Republican says something positive about bitcoin, Democrats will say it is un-American since it threatens the hegemony and dominance and existence of the US dollar.

It probably won’t be as black and white as that, but it’s election season. Take your side, America!