You are currently viewing The political polarization of crypto is underway and it could have huge consequences

The political polarization of crypto is underway and it could have huge consequences

While not without ideology, crypto itself is not inherently left or right wing. You can like or hate it no matter your political persuasion. But increasingly, a partisan divide can be seen forming around it. The right has rushed to embrace crypto and stake its ground, while the left is shunning it and ceding any claims. At times, it might make little sense. But it is happening.

In December, the Conservative parliamentarian Michelle Rempel Garner asked the crypto community what the government could do to “improve the space.” Her colleague Pierre Poilievre and the People’s Party’s leader Maxime Bernier have praised bitcoin. So has Kevin O’Leary, who once ran for the Conservative leadership and is now backing all sorts of crypto ventures. Alberta’s Conservative Premier Jason Kenney has also talked up crypto’s prospects.

On the other side of the political aisle, it has largely been silence. The New Democrats tabled a resolution to study crypto at a party convention in 2016, but appears to have since turned critical. In 2020, the party’s finance critic Daniel Blaikie said cryptocurrencies should be deeper studied because they could be used for crimes such as money laundering and tax evasion and could have an impact on financial stability. Then there’s the former Bank of Canada governor Mark Carney, now a Liberal, who has been open with his dislike of crypto.

Such partisan divides are happening elsewhere, too, and indeed, as with many issues, we may be taking our cues from the United States. Republicans seem to love crypto. Donald Trump, the former president, may have bashed it recently, but in that same interview , he promoted his wife’s blockchain project. Ted Cruz has repeatedly defended crypto in the Senate, where his colleague Cynthia Lummis is now known as the industry’s leading advocate; at one point a majority of her donations were coming from crypto players. Republican congressman Tom Emmer, who once started his day on Twitter with the crypto-meme “gm,” shorthand for “good morning,” has also been embraced by the industry.

At the same time, Democrats have either remained silent or, like Sen. Elizabeth Warren, who bashes bitcoin every chance she gets, have gone on the attack. Rep. Brad Sherman mocked the idea of crypto by invoking a “mongoose coin.” The former presidential candidate Hillary Clinton is not a fan, nor are many of the Biden administration’s appointed officials, from the hawkish securities regulator Gary Gensler to the failed treasury nominee Saule Omarova .

That is, perhaps, not unexpected given the libertarian beginnings of bitcoin. In The Politics of Bitcoin , the scholar David Golumbia writes that bitcoin’s ideology is chock-full of right-wing thought, citing what he views as its alignment with conservative economic ideas. In the 2018 Paris protests , which were sparked by tax hikes, one participant had “Buy Bitcoin” prominently on his yellow vest. But like many phenomena in crypto, the right’s embrace cannot be explained by any one factor.

That is especially so given that the crypto world has, over the past few years, grown more diverse and is no longer dominated by the old-school bitcoiners. A lot of projects are also less power-intensive, blunting criticism from the left over the environmental toll of bitcoin mining. One recent survey shows a range of political leanings of the crypto community to be maybe just a little different from the general population, with the biggest single group leaning small-L liberal by a small margin — it’s just the politicians who are currently drawing their battle lines.

There are also outliers among those politicians. At lower levels of government in the United States, public officials have embraced crypto regardless of party affiliation. But political lines often become blurred at the municipal and regional level.

Whatever the reason behind this partisan divide over crypto, it may not matter in the future. The issue is looking to become a chicken-and-egg, self-fulfilling prophecy: conservative politicians embrace crypto and progressive ones bash it, and so a few more right-leaning people become partial to it while a few more lefties avoid it, and so conservative politicians further embrace it, and so on.

As crypto becomes more mainstream, it will also become more polarizing. And perhaps, more vulnerable to these political trends, in the same way that TC Energy Corp.’s Keystone XL pipeline ended up cancelled not for technical reasons, but due to a backlash defined largely along political lines.

Crypto could become one of those divisive issues for which people readily infer your political leanings based on your view, and that might factor into investment decisions. It could be just a matter of time.

Ethan Lou  is a journalist and author of  Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West .

Source: Financial Post