Ted Cruz fights back against calls for more crypto regulation

“Most members of Congress do not understand crypto, but they are eager to regulate an industry they know nothing about,” he said in a statement, after declining an interview request.

Cruz has emerged over the past two years as an increasingly vocal proponent of cryptocurrency, part of a small collective of bipartisan and mostly younger politicians who have embraced the technology despite concerns among many in Congress about its high energy use and potential for fraud.

The industry has pumped millions of dollars into Washington in that time through campaign contributions, much of it through Super PACs with limited visibility into where the money goes. Public records show Cruz only received a $5,400 contribution from the parent company of crypto exchange Kraken and less than $500 in donations from the industry-backed Bit-PAC. He also owns a relatively modest amount of bitcoin, one of more than 30 financial holdings listed on a disclosure form last year.

Most of Cruz’s fellow bitcoin boosters, like Rep. Tom Emmer, R-Ind., House Majority Whip, is looking to establish a regulatory regime around cryptocurrency, which the industry itself is advocating to bring order to the market. House Republicans announced earlier this year the creation of a new subcommittee of the House Financial Services Committee that oversees cryptocurrency and other financial technologies.

But Cruz has carved out his own space outside of these regulatory efforts, focusing mainly on promoting and expanding cryptocurrency in the United States.

“His approach has been high-level rather than getting into the weeds,” said Ron Hammond, director of government relations at the Blockchain Association, a trade group for crypto firms. “He is not on the relevant committees. To a large extent, his interest seems more about political ideology.”

Still on the fringes

After China banned bitcoin mining in 2021, concerned about the industry’s high energy needs, crypto firms moved to set up mining operations in other countries, including the United States, and drew support from politicians in states like Texas, who saw mining as a booming if volatile new industry for rural economies.

Cruz has not come out against cryptocurrency regulation at all, but he has generally been skeptical of politicians’ efforts to do so, warning the US risks driving the industry overseas like China did.

In a speech to the conservative Heritage Foundation last year, Cruz described cryptocurrency in histrionic terms as “a remarkable innovation” that offered the ability to undermine the power of the Federal Reserve and other central banks.

“Money need not be the exclusive province of politicians to play with at their whim and to fund their latest bid for re-election,” he said. “Rather, money and value could be found through the blockchain, through a distributed ledger that everyone had access to, that no one was responsible for.”

That vision is far outside of what most economists predict as the future of cryptocurrency, which remains on the fringes of the global financial industry. But such sweeping, anti-establishment statements are in keeping with a political career in which Cruz has sought to carve out his own brand apart from the Republican mainstream, focused on issues such as personal liberty and the rising national debt.

Speaking at the Heritage Foundation, he said the GOP should adopt the slogan: “Republicans, we spend a little less than the trillions the other guys are trying to spend.”

Cruz’s outsider status has played well with Texas Republicans, especially those on the far right who are generally suspicious of the government. And cryptocurrency has emerged as an important issue for “a certain subset of Republican primary voters” in Texas, said Mark Jones, a politics professor at Rice University.

“They’re very concerned about freedom, privacy,” he said. “(Cryptocurrency) gives them anonymity to carry out their affairs without the authorities knowing what they are doing. In some cases it is to avoid taxes, in others they just have a fear of the government. What unites them is a desire to be as far off the radar as possible.”

Practical considerations

And there’s a practical side to Cruz’s cryptocurrency advocacy, as Texas has emerged as a destination for bitcoin firms.

Bitcoin mining requires large amounts of electricity to run powerful computers that plug in number after number until they come up with the correct 64-digit sequence for one of the 900 bitcoins released each day. And in Texas’s deregulated power market, you can buy large amounts of electricity relatively cheap.

So far, some 20 crypto mining operations have opened in Texas, including what was claimed to be the largest mining operation in the world at Riot Blockchain’s Central Texas operation, drawing support from Republican Texas Governor Greg Abbott and politicians from both sides of the country . aisle.