It’s silly season in crypto policy, and we’re starting to see hyperbolic hot takes denouncing crypto in two of the major newspapers of record in the U.S.
First, New York Times columnist Paul Krugman, a long-time contrarian on the impact of technology on the economy, released a column on the role of crypto in the election where he suggested crypto was merely “technobabble and libertarian derp, . . . which has actually been reinforced by the passage of time.” He also says he does not believe that crypto solves any problems “that can’t be handled more easily and cheaply in other ways… I’ve been in many meetings over the years in which skeptics have asked crypto advocates that question and have never heard a clear answer.”
This opinion was surpassed in its misunderstanding by the Washington Post editorial board, which decided to write a poorly-evidenced love letter to SEC Chair Gary Gensler. According to the Washington Post’s editorial, “Cryptocurrency is a volatile asset with no intrinsic value. It is used almost exclusively to speculate or to engage in shady businesses, such as selling drugs or collecting ransom, for which the anonymous nature of crypto accounts come in handy.”
And today, unsurprisingly, another opinion piece in The New York Times warns us all, “don’t be fooled.”
Given the high stakes of this election for crypto and America, it is more important than ever that misinformation about crypto be vigorously corrected. As Sen. Daniel Patrick Moynihan famously said “You are entitled to your opinion. But you are not entitled to your own facts.” Here are some key facts:
First, and most critically, only a small fraction of crypto is used for illicit activity, far less than we see in traditional finance, which according to the United Nations could be up to 5% of global GDP. Per analytics firm Chainalysis, money laundering accounts for less than 0.5% of all crypto transaction flows. This is also decreasing steadily over time. Even as crypto usage rose in 2023, the amount of money laundering in crypto fell from $31.5 billion in 2022 to $22.2 billion in 2023. No significant amount of illicit activity is acceptable, but to single out crypto as the villain is both inaccurate and tired.
Additionally, there are many important uses of crypto. For payments, crypto has innovated the stablecoin, a product fixed to the dollar with a total market capitalization of over $160 billion. Crypto is being used for election prediction markets like Polymarket, which even New York Times reporters monitor for insights. It is also being used to find better systems of real-time trading via decentralized finance, and billions of dollars of remittances just between the U.S. and Mexico.
Claims about Chair Gensler being some ordinary good-faith regulator focused on passing regulations on crypto are similarly inaccurate. In reality, Chair Gensler has aggressively fought efforts to pass legislation on crypto, reversing his stance in 2021 that he needed legislative authority to regulate crypto. In doing so, Chair Gensler has engaged in political warfare against Democrats on Capitol Hill, the crypto industry, and even his fellow Biden Administration regulators. By falling for SEC spin, the Washington Post editorial board has fallen for a confidence game by a politician in regulatory clothing.
Even the SEC now agrees that neither BTC nor ETH are securities, and judges appointed by Democrats have also disagreed with the SEC Chair’s claim that the law is clear. Every other major developed country and trading block, from Japan and the United Kingdom to the European Union, has responded to the novel questions posed by crypto by providing new regulation and legislation. In the U.S., however, the SEC has decided to do the governmental equivalent of jamming its fingers in its ears and screaming at companies that they are lawbreakers. This is activity that is not befitting any regulator, and should be the stuff of editorial board scorn — not accolades. The reality is that crypto is here to stay, and the question on the table is simply whether the United States waves goodbye as the next wave of innovation flows offshore.
The crypto industry has been in positive, open dialogue about reasonable legislation, and has engaged in good faith with policymakers. More than a year and a half has transpired since the crypto winter of 2022. Claims that crypto will disappear within six months have been made so frequently and so baselessly that they are beginning to resemble a little boy crying wolf.
It is long past time that the U.S. government do what all its peer nations have done and find workable bipartisan legislation and regulations for crypto. The failure to do so has harmed American competitiveness, the crypto industry and ordinary consumers. Worse, the campaign that has been waged by the SEC Chair largely in the press has given credence to the arguments of Donald Trump that all politics is base and hypocritical, thereby damaging Democrat arguments that they stand for fair process and the rule of law.
But to get to the point of passing legislation, it is important that not just crypto advocates like us but crypto skeptics actually have a basic understanding of what crypto actually is at present. Hopefully, flagging their myriad errors will make the Washington Post editorial board and Prof. Krugman put down their biases and actually look at the reality of crypto. Because without a doubt, crypto is here to stay.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
