Every major American issue seems to get sucked into the “red vs. blue” political dichotomy these days, and now it is cryptocurrency’s turn in the barrel. Following somewhat tense recent testimony between U.S. Securities and Exchange Commission Chairman Gary Gensler and the Senate Banking Committee, Politico confidently declared “Crypto becomes partisan.”
While Capitol Hill fireworks might make it seem that way, the reality is that crypto doesn’t have a natural partisan bent – it is a universal tool that has the potential to benefit everyone in every community.
Kristin Smith is executive director of the Blockchain Association, a Washington, D.C.-based lobbying group. This op-ed is part of CoinDesk’s “Policy Week,” a forum for discussing how regulators are reckoning with crypto (and vice versa).
Attempting to frame cryptocurrency as either a Republican- or Democratic-leaning technology demonstrates a woeful lack of understanding about digital currency and its origins. Bitcoin emerged during the Great Recession, a period when millions of Americans were suffering due to the cascading failures of centralized-government watchdogs and large, overly powerful financial entities. Crypto innovators wanted to create a system that gave everyday Americans complete control over their financial futures and their digital lives.
By the tenets of decentralization, digital currencies are designed to be inherently inclusive and open to all. Whether you live in Manhattan, New York, or Manhattan, Kansas, and have the ability to go online, you have equal access to blockchain networks and all their benefits.
That’s one reason why crypto’s public popularity is growing. According to one survey, roughly 46 million Americans own some form of digital currency, and a clear majority of the country will consider owning it in the future. Crypto’s growth won’t just benefit those who have always had access to traditional financial markets and services. According to a study by the National Opinion Research Center (NORC) at the University of Chicago, cryptocurrency traders are younger and more diverse along racial and ethnic lines, as well.
The universality and open access to digital currency makes it impossible to be inherently partisan, which is why bipartisan groups of lawmakers support it. Progressives like Rep. Ro Khanna (D.-Calif.) and Rep. Eric Swalwell (D.-Calif.) and conservatives like Sen. Pat Toomey (R.-Penn.) and Sen. Cynthia Lummis (R.-Wyo.), who have sharp ideological differences in most areas, all agree that nurturing crypto growth represents a common good for all Americans.
Lost in the partisan bickering and media analysis from the Washington-based press are the real-world benefits that crypto networks provide to users. A central benefit in the era of constant data hacks is that blockchain networks are significantly more secure, given the nature of decentralization. If the network’s data is stored across thousands of computers, it’s that much harder for hackers to access a meaningful entry point to collect and exploit users’ data.
How about basic access to financial services? According to research by the Federal Deposit Insurance Corp. (FDIC), roughly 7 million Americans still lack access to a bank account – people living in areas ranging from rural areas to urban centers. Many of these people struggle because of the entry costs of opening or maintaining a bank account or because they have trouble getting to a physical bank.
By moderating the power of traditional middlemen such as banks and other financial clearing houses, blockchain networks offer users a much easier and more cost-effective option to handle their money. They eliminate onerous fees, remain accessible 24/7 and, frequently, process transactions faster.
We have not yet touched on the power of decentralized finance (DeFi) protocols to open up the financial services universe even further. Crypto lending platforms, like Compound and Aave, have the potential to revolutionize peer-to-peer, global lending practices. Filecoin, the decentralized storage network, is taking steps to completely change the way we think about storing our most important data.
And, if we return to a source of the last financial crisis, DeFi protocols could open up another market: home loans and mortgages. What if a DeFi protocol could be designed to constantly analyze all available mortgage offers to ensure that a client got the best deal possible, rather than relying on the traditional process where a user is at the mercy of whatever rate their bank is willing to give them?
Surely, the scenarios described above could be considered nonpartisan. We believe they enjoy broad support among the American people, and likely in Congress too, if we strip away the tried “red vs. blue” comparison that we’ve been so conditioned to think is natural. We have a choice: Continue to nurture the nascent crypto industry in this country or let the demons of our partisan political system hamper the next wave of cutting-edge financial technology.