Cryptocurrency won’t save the Democrats | Alex Bronzini Bender

tWhis, who was rejected by American voters in support of Donald Trump, now Democrats are in the most serious identity crisis of 40 years. Trump’s search for party relevance in America is less hopeless than the embrace of cryptocurrency, a sector that relies on the ability of Democrats to avoid the financially regulated state they spent building a century. The way the South Bronx district explains America’s poorest Democrat Richie Torres joins forces with Republican Tom Emmer to defend cryptocurrency through the newly formed Congressional Cryptocurrency caucus.

Congressional Republicans are always unified in their support for cryptocurrency. In May 2024, only three Republican lawmakers voted against the bill to significantly ease restrictions on digital tokens. However, since 2016, the cryptocurrency industry has steadily invaded the Democrats. That convergence represents a return to new pre-traditional financial politics, where the party rejected a century, if it continued.

Throughout American history, the politics of money and financial risk have been at the heart of the party coalition. However, since the 1896 election, the Democrats have not been a “hard money” party that is restrictive to deflation. As historians Anton Yeager and Noam Maggaul explain, the de facto fusion of the populist and Democrats has transformed it into a means for those who saw it as a political tool that serves developmental purposes, rather than as a neutral repository of values.

William Jennings Bryan’s defeat drove the party to ease its more radical financial position. However, despite the occasional contradiction, the Democrats generally maintained the anti-abolition stance established in 1896.

Consumer protection in modern form only truly entered the American political dictionary in the 1960s, but this period established the politics of American financial risk. The Banking Act of 1933 (often called Glass-Steagall) separated commercial and investment banks to protect ordinary depositors from speculative overload. The Securities Acts of 1933 and 1934 imposed disclosure requirements on financial markets and established the Securities and Exchange Commission (SEC). Most importantly, the creation of the Federal Deposit Insurance Corporation (FDIC) ended a catastrophic era of banking by guaranteeing deposits.

Collectively, these measures represent a fundamentally new relationship between citizens, banks and financial risks. State actively form financial markets rather than simply enforce contracts.

In the postwar era, Democrats made it even clearer about their approach to “market production.” The Employment Act of 1946 declared the government’s responsibility to maintain “the largest employment,” but the Federal Reserve, the Treasury, the SEC and FDIC implemented financial stability through interest rate caps, capital management and heavy regulations on financial institutions. Although sometimes inefficient, these policies contributed to significant stability. As documented by economists Carmen Reinhart and Kenneth Rogoff, the period from 1945 to 1971 showed virtually no banking crisis in the developed economy.

The Clinton administration’s financial deregulation was abolished in 1999, leading to the abolition of deregulation on derivatives in 2000, but marked a major setback from these principles, ending with the catastrophe of 2008.

From Torres to dishonest New York Mayor Eric Adams, Crypto Democrats argue that cryptocurrency coincides with progressive principles. “Blockchain technology can free the lowest income communities from the high fees of traditional financial systems,” Torres said at the industry-led summit last year. Kamala Harris herself appealed to cryptocurrency as an opportunity for black men. But cryptocurrencies at its heart destroy the tools Democrats have defended for decades.

FDIC was created precisely because it is a routine bank run with uninsured sediment catalyzed. Cryptocurrency exchanges do not offer comparable protection. Federal Reserve sovereignty over the US monetary base allows money supply to be expanded during recessions to maintain employment. A fixed supply of Bitcoin expressly rejects this liability. The SEC was established as unregulated securities markets hurt ordinary investors. Decentralization of Cryptocurrency allows exchanges such as UNISWAP to work outside of the protection framework.

The industry’s “political investment” of borrowing the terminology of political scientist Thomas Ferguson is undoubtedly a critical force in American politics. In some counts, almost half of all corporate campaign contributions in 2024 came from the crypto sector. However, despite Kamala Harris’ substantial concessions to the industry, the top three crypto packs went red with a margin of nearly 2:1. Harris’s promise to the industry is by no means sufficient to outweigh the Trump campaign proposals that have been operating since late July, ensrineing the code as a “permanent national asset” through its citizens’ Bitcoin “stockpile.”

The modest deregulation is not simply what code is in the political game. It’s nothing more than a seizure of the American state. And until Democrats can outweigh Trump’s handouts to the sector, the code will remain Republicans.

Volatility is a fundamental obstacle to further adoption of cryptography. That’s too dangerous for most people. Regulatory adjustments do not change its fundamental pain. As long as cryptocurrencies are held as investments rather than primarily used for trading, their prices remain highly sensitive to fluctuations in investor demand. Additionally, the lack of traditional stabilization mechanisms such as central banks and reserve assets contributes to the high volatility of crypto tokens. Simply put, when crypto grows, it requires both messing up and displacement of the traditional banking system.

Trump has begun doing exactly this. The recently established “Strategic Bitcoin Reserve” by his administration is effectively a backstop for cryptocurrency states. But the Trump administration’s design goes far beyond the “licking” code. As political economist Martin Connings observes, their goal appears to be the destabilization of the traditional banking system itself.

Elon Musk’s S0 call from the “Doctor of Government Efficiency” (DOGE) – itself is named after Dogecoin, the cryptocurrency for mask choice. Trump issued an executive order in mid-February, requiring that previously independent agencies submit to White House surveillance.

The Trump team replaced the already patient FDIC with a destroyed insurance system housed in the Treasury Department, merged with the office of the currency secretary, or simply ruined it through a massive amount of layoffs and employee transfers. In either case, stricter executive control over a bank’s balance sheet is subject to the solvency of the financial system, which is conditional on whether a particular bank is preferred or disliked by the president. It is easy to imagine the resulting loss of trust in the traditional banking system. This is the result of people who believe that what cryptography supports works for their own benefit.

If Democrats want Republican crypto dollar compensation, they need to provide a “industry” more than deregulation. They must become active participants in engineering by returning to the new pre-traditional politics of money and financial risk, the very position that modern Democrats have defined themselves. It would be an unprecedented surrender, even in the long Democrats’ history of betraying the working class in America.