May 14, 2024

Examining the intersection of cryptocurrency and government

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Welcome to State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. I’m your host, Nikhilesh De.

The U.S. is holding its presidential election this fall. More than half a dozen other countries and bodies are likewise holding – or have held – elections this year. Some candidates and lawmakers have already addressed crypto, whether appealing to the industry or just commenting on the technology. The extent to which there is such a thing as a "crypto voter" remains unclear, but it is undeniable that there is a wave of attention directed at this industry.

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Spotlight's on

Former President Donald Trump (left) and current President Joe Biden during a debate in 2020. (Mario Tama/Getty Images)

The narrative

There are more than half a dozen elections this year, from the U.S.'s presidential election this fall to the European Union's election next month to South Korea's election last month and more. While crypto isn't shaping up to be a major election issue in most of these, we've still heard candidates – including former U.S. President and presumptive Republican nominee Donald Trump – directly address members of the crypto community.

Why it matters

Crypto has not really been an issue in past elections. Sure, there have been candidates who had previously addressed crypto or were adjacent to the industry, but there wasn't really a concerted effort to try and solicit people who believe crypto is a major, or the major, factor for their vote. To some extent, that seems to be changing, though it's still hard to quantify the extent to which the crypto contingent will be a major voting bloc.

Breaking it down

This year, CoinDesk is looking to cover the elections as comprehensively as possible, with a focus on crypto and related issues. The first wave of stories we published focused on the extent to which crypto might be an issue in some of these elections, and the extent to which industry participants in different countries expect the election results to affect crypto policy.

Indonesia's incoming vice president, for example, said he wanted to improve technology education – including crypto and blockchain education – during his campaign.

And in the U.S., a massive wave of attention hit last week, after former U.S. President Donald Trump (who's the clear favorite to win the Republican Party's nomination this year) told a group of his NFT holders that he's "for that" in reference to crypto. This comes barely three months after he said "you probably have to do some regulation" around crypto, and years after he famously said he was "not a fan of bitcoin and other cryptocurrencies."

We're off to the races ya'll.

As Danny Nelson reported, it's unclear whether Trump understands the issues around crypto, but he's reaching out to the crypto community nonetheless. His comments sparked a large amount of discussion online about whether he is the bulwark against what's seen within crypto circles as an administrative state's overreach or what role crypto voters might play in the election. Current President Joe Biden's administration has not been the friendliest to crypto, with an array of actions from the Securities and Exchange Commission and Department of Justice taking on crypto's largest exchanges and other companies and services. What will happen as the presidential campaigns shift to the general election in the coming weeks is unclear.

These are questions that warrant further investigation through the coming months. For now, I leave you with CoinDesk's first wave of stories covering the potential effect elections might have in various nations.

We're also looking at polling information, prediction markets, political action committee activities and more. If you have thoughts on the role of crypto in these elections, or the effect these elections might have on crypto, please reach out. We want to hear from you. This goes for the presidential, Senate and House races in the U.S. and their equivalents everywhere else.

You can continue following all of our coverage of elections worldwide at this link.

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Stories you may have missed

Prometheum's Contentious Answer to Crypto Compliance Is Running Late: Special-purpose broker dealer Prometheum once announced a March launch date for its custody operation, which would precede its trading business. Halfway through May, the company is running late. The company attributed the delay to continuing work on a smart contract auditing process.
U.S. Blocks China-Tied Crypto Miners as 'National Security Risk' Near Nuke Base: U.S. President Joe Biden ordered MineOne, a crypto mining facility next to Wyoming's Warren Air Force Base, to halt operations and remove all of its equipment, citing national security concerns due to the company being majority owned by Chinese nationals.
U.S. Senators Question Justice Department's Pursuit of Crypto Mixers: This is a somewhat interesting twist in the ongoing DOJ case against Tornado Cash developer Roman Storm: U.S. Senators Ron Wyden (D-Ore.) and Cynthia Lummis (R-Wyo.) are concerned with how the DOJ seemed to set aside longstanding Financial Crimes Enforcement Network (FinCEN) guidance (and common interpretations of that guidance) in its latest filing pushing back against Storm's effort to end the criminal case against him.
U.S. House's McHenry Says Bill on Crypto Market Structure Will Get Floor Vote: The Financial Innovation Technology for the 21st Century Act – a crypto market structure bill – and an anti-central bank digital currency bill might see a floor vote by the full House of Representatives before the month is out.
U.S. CFTC Proposes Ban on Political Event Contracts: The Commodity Futures Trading Commission wants to get rid of political prediction markets in the U.S., though the vote to launch the proposal for public feedback received a split vote from the regulator's five commissioners.

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This Week

Tuesday

11:00 UTC (1:00 p.m. CEST) A panel of judges found Tornado Cash developer Alexey Pertsev guilty on money laundering and related charges.
18:00 UTC (2:00 p.m. EDT) Samourai Wallet co-founder Keonne Rodriguez was set to appear before a district judge in New York, but this hearing has been moved to May 28.

Wednesday

14:00 UTC (10:00 a.m. EDT) The House Financial Services Committee will hold a hearing with federal bank regulators.

Thursday

14:00 UTC (10:00 a.m. EDT) the Senate Banking Committee will hold a hearing with regulators on financial stability.

Friday

There will be another hearing in Binance compliance head Tigran Gambaryan's ongoing detention in Nigeria.
Tornado Cash developer Roman Storm's legal team has a deadline to reply to the U.S. Department of Justice's most recent filing.

Elsewhere

(The Wall Street Journal) The Journal reports that Binance fired an investigator who alleged that a customer was manipulating markets, though Binance denied the claim in the story.
(Wired) Wired's Andy Greenberg digs through the Dutch case against Tornado Cash developer Alexey Pertsev. A few important details that spring to mind: 1) the Dutch case seems to be that Pertsev, by helping build Tornado Cash, directly enabled its usage by malign actors; 2) the U.S. case against fellow dev Roman Storm also alleges that Storm retained a bit more control for longer than his defense claims, and that he also profited from Tornado Cash's usage. Pertsev was found guilty, and it remains to be seen how Storm's case will play out.
(Forbes) Forbes reports that defense company called Leonardo is testing technology that surveils "anything that emits a signal, including phones, smartwatches" and other items, and can be used to create "electronic signatures" for people without warrants. While this article leaves a few questions unanswered – like how the technology might take readings from RFID tags on library books and pet chips – it raises concerns about increasing surveillance tools and how they may be used.

Today's Toot

Correction

Last week's newsletter said organizations were suing the SEC because they had already been sued. I should have said that they were suing to preempt possible lawsuits.

If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Twitter @nikhileshde.