Welcome back!
Several weeks ago, I discussed how crypto is causing divides in the Democratic party. Now, on the other side of the aisle, Republicans are uniting over crypto-policy. Such political developments may seem minor but have immense power in future policy decisions, which is what I try to highlight in this week’s newsletter.
I hope you enjoy, and see you next Sunday!
-Katja
GOP unites in the name of crypto
The US Senate Republican Policy Committee (RPC), the policy group for Senate Republicans, recently released a paper on cryptocurrency. This paper, titled “Cryptocurrency Goes Mainstream,” offers no new information about crypto. However, it outlines several key issues and summarizes some of the important talking points around crypto regulation. The report breaks down into three sections as follows,
Cryptocurrency grows up - The market cap of crypto increased to over $2 trillion over the past year, driving the interest of the Federal government in exploring this industry. President Biden’s executive order pushed for digital asset development within the US as well as directed the Treasury Department to explore the possibility of a central bank digital currency (CBDC).
Potential benefits of cryptocurrency - Crypto has the ability to reduce transaction costs while increasing speed and privacy of transactions. This is especially important for those who have less trust in their government or institutions (like minority communities).
The dark side of cryptocurrency - It wouldn’t be a crypto discussion without mention of its nefarious use-cases like for illegal drug transactions and ransomware crimes. In addition to this, crypto’s energy use remains a point of concern.
As several news outlets noted, publishing such research is significant not for the content but for the symbolic unification of the Republican party over crypto regulation. Although this one paper has little power over political dynamics on the Hill, future acts by the GOP could produce unintended consequences, especially if Republicans do not take Congress majority during the midterms.
This comes down to political polarization. Over the years, partisanship has increased, which you have most likely felt in your social life just as much as you have seen it on the news. The rise in political bias also brings with it animosity towards the opposing party. As Pew Research reported,
“In each party, the share with a highly negative view of the opposing party has more than doubled since 1994. Most of these intense partisans believe the opposing party’s policies ‘are so misguided that they threaten the nation’s well-being.’”
Political divides shape how members of Congress interact with each other and shape legislation. During the hearings I’ve covered over the past several months, many of these dynamics play out over crypto as much as other pressing political issues. Considering this with the unification of Republicans and fissures within the Democratic party, crypto could quickly become a partisan issue (ultimately, slowing down any possibility of comprehensive crypto legislation).
However, there is still a chance that Republicans may take Congress in the midterms. In this case, having a unified party over crypto will be beneficial to pushing pro-crypto legislation and proposals. As of now, the crypto industry should not celebrate the RPC report as much as it’s currently doing since it may not produce the best outcome for crypto in the long-term.