The future of cryptocurrency depends on certain internal and external factors. To illustrate better, internal factors refer to the self-sustainability of coins and their resilience through events like forking and wading past scalability concerns. That said, external factors such as market adoption and government policies could really be a lifeline or death-punch for digital currencies.
The latter is arguably most consequential to the success of cryptocurrency. Since most coins go through stages like Initial Coin Offerings, government regulations play a huge role in their establishment. The Chinese government, for instance, banned ICOs in September 2017. This hostile stance, if adopted globally, will be highly detrimental to the progress of cryptocurrency.
Now, as far as economies go, the U.S. is, to borrow a phrase from Donald Trump, “tremendously important.” Indeed, when the American economy coughs, the rest of the world catches a cold. This is why the regulatory regime is crucial to the well-being of the likes of Bitcoin. As such, it is important to know where the major players in that market stand.
Development Stage of Cryptocurrency In Relation To Politics
It goes without saying that digital currency is a relatively new concept. For this reason, the laws are yet to fully catch up. Politicians often legislate on matters important to their constituents. Naturally, most not everyone considers cryptocurrency an important issue at the moment.
Therefore, Democratic views on Bitcoin and cryptocurrencies are still maturing and evolving. It will take time before clear stands emerge as with other issues like healthcare, education, and social welfare.
Moreover, a lot of coin users are pretty much averse to politics. So, it is fair to say that American parties, both Republican and Democrat, lack coherent policies on digital currency. As Bitcoin and other cryptocurrencies are adopted more widely, it is fair to expect an uptick in legislation motions.
Trends Among Regular Americans
At the moment, cryptocurrency adoption is still low, with 82% of American adults never having interacted with cryptocurrency. Among those who have interacted with it, Democrats are more likely to own cryptocurrency than Republicans, at 14 percent to eight percent respectively.
To break down the numbers further, the metrics are in favor of younger people. Adult millennial men under the age of 35 are the most ardent users of cryptocurrency. Understandably, they tend to be more liberal than their older counterparts. Baby-boomers are generally more conservative and so are their investment decisions. All this means that it is in fact in the interests of the Democratic party to come up with legislation on this subject.
General Democratic Party Policies
While at this time, Democrat legislators and officials have no general take on this issue, a good deal of inference can be made based on the party’s general economic stances. The common Democratic trend since the great depression has been policies benefitting low- and middle-income families more. As such, they lean toward social democratic policies whereby the state plays the role of a mild equalizer. This means a progressive tax code where those at the top share a larger load of the tax burden.
A more established state presence means more regulations to go along with it. Democrats also advocate for regulations that protect consumers. Ultimately, the question will be whether Bitcoin is a useful and safe commodity. Currently, the volatility, rampant fraud, and uncertainty in the industry does it no favors. It is fair to expect Democrat legislators to advocate more regulations for cryptocurrency in the near future.
Legislation such as the Dodd-Frank Wall Street Reform Act in 2010 is indicative of this. The fact is that Democrats respond to market turmoil with more regulations. The scope and effect of any proposed legislation will be interesting as to the future success of Bitcoin.
What Do Current Democratic Politicians Think?
Since it is difficult to find consistent party policy on this matter, how about the thoughts of individual politicians? The opinions of respective politicians are as different as their personal opinions on the stability and long term future of cryptocurrency.
For starters, the general tone in Washington has been one of stubbornness and ignorance. Most congressmen and women simply don’t understand the mechanism and implications of cryptocurrency.
Understandably some have viewed it as a threat the established order. If we are to talk of anything being unconventional and anti-establishment, cryptocurrency is as clear cut as they come. In view of this, there has been rare unison in Capitol Hill calling for more government red tape.
Interestingly, even free-market Republican conservatives who would ordinarily want government to back off are in favor. This is because some see cryptocurrency as a potential destabilizer of the American economy. There have been House committee hearings on the stability or otherwise threat posed by digital currency. Politicians across the party divide have called for better oversight. One is Democrat Carolyn Maloney who happens to be a senior member of the House Financial Services Committee. She called for the SEC to be the regulatory crypto body. She has stated, “A lot of people don’t realize there’s nothing backing these virtual currencies.”
Now, one may point out that there is nothing that backs the US dollar, either, other than sheer collective faith. However, she in not-so-subtle terms expressed the fears of many; what is the value of cryptocurrency based on? The importance of public awareness there can’t be overstated.
Protection of Innovation
Others, however, have a more positive opinion. Democratic Senator Chris Van Hollen, a member of the Senate Banking Committee for instance sees the importance of nurturing innovation. He was cautious of excessive regulations. This is because any regulations will still protect revolutionary technological innovations like Blockchain, stating, “The goal here is to have rules of the road that protect consumers without trying to squash innovation.”
This is a very welcome stance for crypto-enthusiasts out there. The basic idea of digital currency will be upstaged if the rules are too stringent. Therefore it is correct to say that the Democratic Party is not hostile to the underlying framework of digital currency. The regulatory scope will be to the extent of its effect on markets and use as currency. For instance, the alleged use of Bitcoin by criminals to evade taxes may put it in the Democrats’ crosshairs. This would be an area where Bitcoin facilitates moves contrary to the interests of Democrats.
This could ultimately be the deciding factor for the future Democratic legislation regarding Cryptocurrency. At the moment, there still linger, though some might argue unfairly, questions as to transparency. Lawmakers generally have the notion that unregulated currencies like bitcoin are exploited for illegal activities like money laundering. There have certainly been documented cases of this type of criminal activity. However it does nothing to take away cryptocurrency’s offering legitimate and safe means of online payment among other services. This bad rap has been largely due to the lack of mainstream use because Bitcoin for instance bypasses the traditional banking system.
When asked about the adoption of Bitcoin for campaign financing, Joe Birkenstock, former chief counsel of the Democratic National Committee echoed that, “If the interest is in transparency, we really want to make sure we know exactly who is donating these funds… distinction around anonymity and pseudonymity can make that difficult.’’
The legitimacy of digital currency in its entirety is crucial for the change in lawmakers’ attitudes. This is because politicians’ generally ride on public opinion. If Bitcoin for instance attains a majority in terms of legitimacy, attitudes will change like the wind.
The Recognition of Cryptocurrency
In the U.S., cryptocurrency is still at the developmental stage. As such it cannot be compared to legal tender, however functionally similar they are. At the moment, crypto assets are contested between the SEC, the Commodity Futures Trading Commission (CFTC), Treasury, the Federal Reserve and individual states. This is in regards to jurisdictional regulation.
With regard to campaign donations, it is actually acceptable. However the FEC labels them as “in-kind donations.” This means that they are treated as goods and services rather than cash contributions.
Ultimately, that is the crux of the matter. Cryptocurrency should not expect legitimacy from the establishment as it presently lies. The banks and such institutions will be reluctant to adopt them until it is inevitable. You can almost always count on politicians to follow suit.
- Democrats More Likely to Own Digital Cryptocurrencies – NewsMax Finance
- US: Republican, Democrat Officials Calling For Crypto Regulation In Rare Show Of Unity – CoinTelegraph
- Politicians are Getting in on the Cryptocurrency Craze to Fund Campaigns – CNBC
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