| We’re heading into an election year and crypto’s moment on the campaign circuit seems imminent. On March 20, Florida Gov. Ron DeSantis (R-Fl.) announced legislation to prohibit the use of a federally controlled central bank digital currency (CBDC) in the state. Soon after, Sen. Ted Cruz (R-Texas) introduced legislation to prohibit the Federal Reserve from developing a direct-to-consumer CBDC which could be used as a financial surveillance tool by the federal government with two other Republican co-sponsors. 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 any suspicion that crypto wasn’t political, then I’m sure that suspicion is now shattered. Crypto is politicized. Gov. DeSantis made it about political parties with his office announcing that the legislation is an attempt 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 surveillance and control.” Senator Cruz didn’t make it about political parties and instead leaned into the importance of financial privacy and the global dominance of the U.S. dollar as a matter of national security. This itself is interesting because that’s exactly the point at the center of Senator Warren’s anti-crypto stance, which includes new anti-money laundering bills and tamping down on sanctions evasion. Hence the perceived effectiveness of Warren’s anti-crypto army. She has allies across the aisle like Senator Roger Marshall (R-Kansas) making her anti-crypto campaign less of a left-leaning campaign and more of a this-is-for-the-good-of-the-country-leaning campaign. Senator Warren will likely get other Republicans on-board with this type of campaign since it is positioned around preventing money laundering and it’s probably pretty difficult to be a member of Congress and appear to support money laundering. Where crypto’s politicization will get more interesting is specifically on the topic of CBDCs and Bitcoin in the shadow of the current banking crisis. Senator Warren is pro-CBDC, saying last year in an interview with NBC’s Chuck Todd: “Instead of Bitcoin we could be talking about digital currency, that’s something totally different, because that’s a government-backed electronic transfer … but that has something that backs it up.” Adding later, “If you think: We can improve that in a digital world? The answer is sure you could but in that case let’s do a CBDC.” If history is a guide, if CBDCs enter the political discourse this coming election cycle it’ll become a red-blue issue. Conservatives have already begun coming out as anti-CBDC because its introduction could allow the government to surveille and potentially censor regular, law-abiding Americans. Liberals could then align as pro-CBDC because private (meaning non-government) cryptocurrencies enable money laundering and don’t offer the same government-assured backstop a CBDC would. Of course, the conversation around CBDCs should be bipartisan: If a CBDC enables unfettered surveillance of financial transactions then all Americans should make it a priority to block that. Privacy, of course, is incredibly important. – George Kaloudis
[email protected]
@gckaloudis | 