Why Crypto Could Swing The 2024 Election


LONDONDERRY, NEW HAMPSHIRE – After winning the Republican Primary in New Hampshire, former U.S. … [+] President Donald Trump reiterated his opposition to central bank digital currencies—a sign that he could soon weigh in on crypto policy issues as well. (Photo by Chip Somodevilla/Getty Images)

Getty Images

The economy. Immigration. Climate change. Abortion.

Elections hinge on hot-button issues like these.

But a new wedge issue is emerging in American politics—one that is poised to turn out millions of voters to the polls. One that scrambles party lines and demographic boundaries. One that could well determine the outcome of the next presidential election.


In contrast to 2020, crypto holders are coalescing into a coherent voting bloc in 2024. Millions of these voters live in key swing states where the last presidential election was decided by the narrowest of margins. And millions consider crypto to be a make-or-break issue at the ballot box, according to research from Morning Consult.

The Rise Of The Crypto Voter

The rise of the crypto voter tracks directly with the rise of crypto as an asset class.

Keep in mind that the bulk of the last Bitcoin bull run took place after the 2020 presidential election. It was months before Michael Saylor donned a laser-eyed profile picture, corporate brands started tweeting “WAGMI,” and Elon Musk shilled dogecoin on national TV.

Biden’s election was followed by the most explosive period of retail adoption in the industry’s history. The last bull run minted a new class of millionaires—and a much larger class of crypto voters.

Today, 1 in 5 Americans owns digital assets. That’s 52 million people. Perhaps most striking is the political composition of this demographic: according to survey data from Coinbase and Morning Consult, 22% of respondent crypto holders identified as Democrats, 18% as Republicans, and 22% as Independents. Moreover, 60% are Gen Z or Millennials, and 41% are minorities.

Young, diverse, and bipartisan. These are the three primary characteristics of the crypto constituency. While this voting bloc was a non-factor in 2020, it is primed to play an outsize role this November.

Courting the Crypto Vote: The Key To The White House?

Swing voters decide elections. That’s why campaigns are building their teams in battleground states like New Hampshire, Nevada, Ohio, and Pennsylvania. Morning Consult conducted a poll to gauge crypto sentiment in these four swing states. In doing so, it discovered millions of Americans for whom digital assets is a top issue.

The most important finding? Approximately 18% of voters in these states (or 3.4 million people) hold digital assets. And an eye-popping 55% of those said they would be less likely to vote for candidates who stand in the way of crypto values. Those values include a belief that the current economic system is not fair and favors big business, and a corresponding desire for a decentralized, web3 economy.

In other words, crypto could decide the votes of up to 1.9 million voters across these four swing states alone—enough to tip the election.

These swing states are often decided by the slimmest of margins. In 2020, for example, Biden edged Trump by only 82,000 votes in Pennsylvania and only 34,000 votes in Nevada.

Given the rapid growth of this voting bloc, candidates could redraw the electoral map in 2024 by simply adopting pro-crypto positions. The numbers paint a clear picture: whichever presidential nominee secures the crypto vote could also secure the White House.

The crypto vote is essentially up for grabs, and the sheer size of this voting bloc presents a tremendous opportunity for political candidates. To better understand this opportunity, I reached out to Faryar Shirzad, Head of Policy at Coinbase.

“There are tens of millions of Americans who have participated in the crypto economy,” said Shirzad. “When I talk to innovators around the country, the passion they have for what blockchain can do is incredible. Any politician who ignores this passionate community is missing an important and motivated part of the American electorate.”

Biden, Bitcoin, and Young Voters

Now here’s the irony: despite the political upside of embracing Bitcoin and crypto, the two parties’ leading contenders—Joe Biden and Donald Trump—have mostly stayed away from it.

In the case of President Biden, he appears disinterested in engaging with this cohort of voters altogether. Indeed, many of his policies have alienated digital asset holders.

Last year, for example, President Biden accused “wealthy crypto investors” of exploiting tax loopholes supported by “MAGA Republicans.” Meanwhile, his top cop at the Securities and Exchange Commission—Chair Gary Gensler—has sought to subdue crypto exchanges and protocols with a regulation-by-enforcement approach that has been decried by multiple members of Congress. And one of his strongest allies in the Senate, Senator Elizabeth Warren, has raised an “anti-crypto army” to wage war on the industry.

Could the administration’s hostile posture towards crypto come back to haunt Biden in November?

Gemini Co-founder and President Cameron Winklevoss seems to think so. In a post on X, Winklevoss expressed his view that Senator Warren and Chair Gensler’s “war against crypto is going to alienate an entire generation of would-be Democrats.” In Winklevoss’s view, Warren and Gensler could be an albatross around Biden’s neck by reminding voters of his administration’s crack down on crypto companies and investors.

Given Biden’s aggressive approach to digital asset regulation, will Donald Trump distinguish himself from his competitor by taking the opposite tack?

Trump’s Big Opportunity

By simply embracing Bitcoin and the values of decentralization, Trump could poach pro-crypto Democrats and Independents that would have otherwise voted for Biden. And he could make a play for the 1.9 million people in swing states like New Hampshire, Nevada, Ohio, and Pennsylvania for whom crypto is a top concern. In 2020, Trump lost three of these four states by razor-thin margins. But he could win them back by catering to crypto voters.

There’s just one hang-up: Trump has previously expressed skepticism of digital assets. In an interview on Fox Business in June 2021, Trump said, “Bitcoin, it just seems like a scam. I don’t like it because it’s another currency competing against the dollar.”

So is Trump set in his ways? Is he destined to oppose Bitcoin forever? Or could the allure of a new voting coalition entice the Orange Man to embrace the Orange Coin?

While Trump has taken a hardline against crypto in the past, there is growing evidence that his stance has softened significantly in the last two years. In December 2022, for example, he launched a collection of NFT trading cards to gin up support from his base. To build on this success, he launched a new collection of “Mugshot” NFTs last month. This new NFT raise came on the heels of a report which showed that Trump at one time owned $2.8 million in cryptocurrency on an Ethereum wallet, according to financial disclosure documents.

Trump has dipped his toes in the crypto waters by experimenting with NFTs. Could he cannonball into bitcoin next? Whether he does could change not only his financial portfolio but the electoral map in 2024.

How Misinformation On Hamas And Crypto Fooled Nearly 20% Of Congress


WASHINGTON, DC – Senator Elizabeth Warren convinced 104 of her congressional colleagues to sign a … [+] letter to the White House calling for a deeper investigation into Hamas’ use of crypto in illicit finance. But the impetus behind the letter was a statistic that later turned out to be misinformation. (Photo by Chip Somodevilla/Getty Images)

Getty Images

For all his strengths, Uncle Sam has a track record of making big mistakes based on bad intelligence.

Consider a few missteps: The Gulf of Tonkin Incident was the pretext for escalating US troop presence in Vietnam; Special Forces spent years searching for Osama bin Laden in the wrong country; and disputed reports of Weapons of Mass Destruction were the casus belli for the American invasion of Iraq.

The fog of war clouds even the clearest minds. So in the wake of Hamas’ attack against Israel, it’s worth asking—could bad information again lead to bad decision-making?

In the curious case of crypto and terrorist financing, the answer appears to be yes.

The $130 Million Mix-Up

Following Hamas’ attack, a report emerged with estimates that the terrorist organization had raised more than $130 million in cryptocurrency to fund its war against Israel. Senator Elizabeth Warren—the self-appointed generalissima of the “anti-crypto army”—latched onto this eye-popping figure to conscript 104 of her congressional colleagues to sign a letter to the White House urging the administration to take a closer look at crypto’s role in illicit financing. The letter called crypto a “national security threat” to the U.S. and its allies and cited the $130 million figure as key evidence for this assertion.

There’s just one problem: that $130 million figure appears to be false.

In Warren’s letter, she claimed that Hamas and Palestinian Islamic Jihad collectively “raised over $130 million in crypto” between August 2021 and June 2023. She cited data from an article in The Wall Street Journal, which leaned heavily on blockchain analytics firm Elliptic as a source. But last month, Elliptic disputed both Warren’s letter and The Wall Street Journal’s extrapolation of its research.

Why Data Firms Dispute Warren

A statement published by Elliptic took direct aim at the $130 million statistic, stating “There is no evidence to suggest that crypto fundraising has raised anything close to this amount, and data provided by Elliptic and others has been misinterpreted.”

Elliptic went further, claiming “There is no evidence to support the assertion that Hamas has received significant volumes of crypto donations.” The company also underscored the weakness of crypto as a terrorist fundraising tool since the transparency of the blockchain allows law enforcement to track and trace transactions in real time.

Corroborating Elliptic’s assertions was a statement from Chainalysis, another leading blockchain analytics firm. In a blog post, the Chainalysis team said it felt prompted to correct the record on illicit financing after seeing “overstated metrics and flawed analyses of these terrorist groups’ use of cryptocurrency.”

Chainalysis explained that the $130 million figure cited by Senator Warren more likely reflects the total volume of crypto that flowed between entities with links to Hamas—not the actual amount of money raised by the organization. In other words, a significant portion of the $130 million figure likely involved legitimate transactions that had nothing to do with terrorist financing. The company then used a case study to show how conflating volume flow with funds raised can exaggerate fundraising estimates by several orders of magnitude.

Keep in mind that the core business of Chainalysis and Elliptic is to help governments identify illegal activity on the blockchain. These companies have a strong financial incentive to play up the link between crypto and criminal activity. But even they agreed that the use of crypto in illicit financing has been overstated.

To understand how a letter based on false information could find its way from Congress to the White House, I reached out to Nic Carter, the cofounder of Coin Metrics—a crypto intelligence firm.

In an interview, Carter said, “A game of telephone took place, starting with Israeli intelligence and ending in the halls of Congress. At each step the data became less concrete and the claims more extravagant.”

Carter broke down this game of telephone in a step-by-step process: “Blockchain analytics firms took addresses listed by Israeli intelligence and made aggressive inferences from the data, which were then repeated and extended by journalists, which were then reinterpreted again by Senator Warren in her letter to the White House.”

The end result was a bloated number that bore little resemblance to reality—yet it continued to drive policy conversations in Washington.

Crypto ‘A Very Small Piece Of The Puzzle’

In addition to blockchain intelligence firms, expert witnesses at a Senate Banking Committee hearing last month also pushed back against Warren’s characterization of crypto’s role in terrorist financing.

When Senator Warren cited the $130 million figure in a question directed to Dr. Matthew Levitt—a counterterrorism scholar at the Washington Institute for Near East Policy—he provided a fact-check in real time: “I do think that number is very likely exaggerated. It’s happening. They are getting money to crypto—there’s no question. But the experts who follow this closely think that number is inflated.”

Dr. Shlomit Wagman—a senior fellow at Harvard University who previously led Israel’s campaign against terrorist financing—also proved to be an inconvenient witness for the anti-crypto faction of the Senate Banking Committee. Among the many laundering tools in Hamas’ arsenal, Senator Warren called crypto “one big one.” But Dr. Wagman challenged this assertion, emphasizing that the major funding for Hamas comes not through crypto but through bank accounts, money exchanges, and cash. In Wagman’s own words: “most of its budget and funds is still going through the traditional channels, and I want to make that clear.”

During the hearing, Wagman also reminded lawmakers that “crypto is currently a very small part of the puzzle. The major funding channels are, were, and remain state funding. Iran and others—those are the major players.”

Dueling Visions: Warren Vs. Lummis

There’s an old maxim in politics: “Never let a good crisis go to waste.” As an exceptional politician, Senator Warren understands this principle.

Well before the Hamas attack, Warren was beating the drum on crypto money laundering. In August, she re-introduced the Digital Asset Anti-Money Laundering Act in an effort to clamp down on illicit activity in the cryptocurrency space. But a bipartisan coalition raised concerns that the proposal could impose undue burdens on software developers by treating them like big banks.

In effect, Warren’s legislation would require crypto miners, validators, and wallet providers to file the same compliance reports as large hedge funds and multinational banks. Since none of these businesses custody assets for customers, this would impose an enormous regulatory burden on industry participants—which is why several Republicans and Democrats refused to support the bill.

Just as support for Warren’s legislation began to cool, Hamas attacked. Then came claims that Hamas had raised over $130 million in crypto—claims that have since been debunked.

But Warren saw a crisis and capitalized on it. She has since used this statistic multiple times to bring renewed attention to her anti-money laundering legislation.

All this raises a critical question: Will misinformation form the foundation of crypto policymaking? Or will lawmakers heed the facts, even when they defy their previously held viewpoints?

There’s a contingent of legislators who are keen to correct the record—Senator Cynthia Lummis is among them. In a post on X after last month’s hearing, Senator Lummis called attention to the inaccurate fundraising figure and cited estimates from Chainalysis and the American Enterprise Institute which show that crypto accounts for less than 1% of all illicit finance worldwide. Lummis posted: “Make no mistake, crypto assets are not the problem. Bad actors, who exist in every sector, are.”

Both in public and in private, Lummis has sought to educate her Senate colleagues on the merits of Bitcoin—both as a long-term hedge against inflation and as a means of transferring value quickly, cheaply, and securely around the world. In Lummis’ view, Congress must fight Bitcoin money laundering, but it can do so without crippling the industry.

Senator Lummis and Senator Warren have dueling visions for crypto on Capitol Hill. Lummis wants to make the United States a haven for crypto innovation; Warren wants the opposite. Who wins the legislative battle could determine whether digital asset innovation stays in America or moves offshore.

How Hamas’ Crypto Fundraising Helped Finance Its Own Destruction


RAMALLAH, ISRAEL — Hamas thought it could flout U.S. sanctions by fundraising with bitcoin. But the … [+] plan backfired, exposing key donors to Western surveillance. (MARCUS YAM / LOS ANGELES TIMES)

Los Angeles Times via Getty Images

Senator Elizabeth Warren sent a letter to the White House this week imploring the administration to take a closer look at the role of cryptocurrency in financing terrorism. Prompting her letter were reports that Hamas had raised millions of dollars in crypto in the leadup to its attack against innocent Israeli civilians. Senator Warren, who has long been an outspoken critic of digital assets, has previously characterized bitcoin as a haven for terrorists and money launderers.

But Hamas would beg to differ. Since the extremist group first began soliciting bitcoin donations in 2019, that haven has become a hell.


Hamas learned the hard way what so many criminals have learned before: sending money over the most advanced, transparent payment system ever invented makes it nearly impossible to conceal illegal behavior. Digital footprints left on the blockchain can be used by forensic experts to expose networks of financiers, provide evidence for law enforcement, and create an avenue for authorities to divert funds originally directed towards illicit causes.

Hamas knows this now. That’s why it abandoned bitcoin altogether in April of this year.

But just as the terrorist network can’t change the blockchain, it can’t change the damage it’s done. Hamas’ foray into crypto has not only exposed some of its most ardent supporters to criminal prosecution; it has also financed its greatest enemies—the United States and Israel—to the tune of millions of dollars.

This is the context missing from recent reports on Hamas’ prolific fundraising efforts—rather than being a resounding success for the organization, Hamas’ experiment with crypto appears to be a series of own goals. Consider the group’s dismal record with digital assets:

2019—Early Bungles With Bitcoin

In January 2019, al-Qassam Brigades—Hamas’ military arm—issued a call to donors across the world to “support the resistance financially through the bitcoin currency,” according to a report from Al Jazeera. With this fundraising pitch, Hamas became the first terrorist group to adopt cryptocurrency for its fundraising operations.

Hamas thought it could circumvent Western sanctions by adopting decentralized money. But in its early communications with followers, it made two critical mistakes: 1) telling supporters bitcoin donations are anonymous when they are, in fact, pseudonymous; and 2) claiming that transactions on the network would be “untraceable,” when they are, in fact, traceable down to the last millisecond.

From day one, Hamas had set itself up for failure by misunderstanding the fundamental nature of blockchain as an immutable public ledger. But the gravity of its mistake wouldn’t become apparent until the following year.

2020—Uncle Sam Hijacks Hamas Website

The ineptitude of Hamas’ crypto bundlers made them an easy target for Western law enforcement. In August 2020, the Department of Justice conducted its largest ever seizure of terrorist crypto accounts, confiscating millions of dollars from al-Qaeda, ISIS, and Hamas. Hamas was the biggest prize of the three, with federal officers tracking and seizing 150 accounts associated with the terrorist organization. In addition, the DOJ brought criminal charges against multiple Hamas donors based on their blockchain activity.

The DOJ then funneled Hamas’ crypto funds into the U.S. treasury—but it didn’t stop there. With judicial authorization, it also began to covertly operate Hamas’ fundraising website, alqassam.net. With Uncle Sam as the man behind the curtain, Hamas supporters thought they were donating bitcoin to support violence against Israel. But in reality, all their bitcoin was going to wallets controlled by the American government.

2021 To 2023— Israel Claims Crypto For Treasury, Hamas Abandons Bitcoin

In the years that followed the DOJ operation, Israel’s National Bureau for Counter Terror Financing seized nearly 190 accounts linked to Hamas and “tens of millions of dollars” in crypto, according to a recent report from Reuters. In an ironic twist, Israel then redirected that crypto to its own treasury—the same treasury funding the fight against Hamas.

With its every move on the digital ledger being tracked, Hamas finally recognized in April 2023 that bitcoin is a flawed tool for money laundering. And so, it warned its followers to stop sending donations via the cryptocurrency.

In an official statement, Hamas announced that it had made this decision “to ensure the safety of donors and protect them from any harm.” The terrorist group explained that “the intensification of prosecution and the redoubling of hostile efforts against anyone who tries to support the resistance through this currency” was the reason behind its bitcoin moratorium. After suspending bitcoin, total cryptocurrency donations cratered almost overnight.

So why did Hamas decide to ditch bitcoin so abruptly? I interviewed Alex Gladstein, the chief strategy officer at the Human Rights Foundation, to put Hamas’ decision in context.

“It’s not a good idea to do large-scale crime with bitcoin because it is trackable from the fiat on- and off-ramps,” said Gladstein. “For an individual human rights activist, bitcoin is a great tool for concealing a few hundred or even a few thousand bucks. But for an organization like Hamas with a billion-dollar annual budget, it’s going to be hard for them to buy and sell large amounts of bitcoin without getting busted.”

Gladstein also emphasized how efficient Israel has become in mapping out cryptocurrency transactions. “The IDF is very good at tracking this stuff,” said Gladstein. “It is less good at tracking cash, gold, and Qatari bank accounts.”

Why Hamas Prefers Cash to Crypto

Since Hamas’ attack against innocent civilians earlier this month, the flood of crypto donations that was once flowing to the organization has slowed to a trickle. The terrorist group has only moved a few thousand dollars in digital assets over the last several days, according to TRM Labs, a blockchain intelligence company. TRM believes this is likely because Israeli intelligence has learned to snipe Hamas accounts at the first sign of movement.

“Over the years, the U.S. and Israeli authorities have leveraged the power of the blockchain to investigate, block, and seize funds related to Hamas’ attempts to fundraise in crypto,” said Isabella Chase, a senior policy advisor at TRM. “Hamas has troubles competing with Western intelligence in cyberspace, so it’s no wonder it relies far more heavily on old-fashioned funding streams.”

According to Chase, these more traditional funding streams include “state sponsors like Iran, networks of shell companies, hawalas, bulk cash smuggling, and taxes. The simple truth is, it’s much harder to track and trace the movement of these funds as opposed to cryptocurrency.”

Another reason Hamas might prefer cash is because it becomes almost impossible to move crypto to fiat off-ramps once the wallet holding it has been blacklisted by law enforcement. So even though Hamas reportedly raised $41 million in cryptocurrency according to The Wall Street Journal, it’s debatable the extent to which that money has any utility at all. The U.S. and Israel have sanctioned the wallets holding this crypto, which means that any exchanges that interact with them could be sanctioned as well.

Moreover, there’s a good chance that much of Hamas’ crypto has already been seized by the Israeli government. Yaya Fanusie, the Director of Policy for AML and Cyber Risk at the Crypto Council for Innovation, told me that “recent media reports refer to Israeli seizure documents for some of their information, which indicates that Israel may have confiscated these funds in whole or in part.”

The Bigger Picture

The Hamas case study contradicts the idea that bitcoin is good for illicit financing. To the contrary, bitcoin can be a honeypot for terrorists and money launderers. The promise of permissionless payments unfettered by international sanctions is the sweet, irresistible bait. But the transparent, permanent, and immutable nature of the blockchain is the trap.

If criminals are beginning to understand this, then policymakers should too. Legislators who would ban digital assets for fear that they could be used for illicit finance should consider the unique failures of Hamas’ cryptocurrency fundraising program.

From Venture Capital To Wall Street, A New Paradigm Emerges: BTC = ESG


ABILENE, TX – Today, renewables like wind and solar power more than 50% of bitcoin mining activity. … [+] The world’s leading cryptocurrency is creating new markets for clean energy, which has investors taking a second look at bitcoin through an ESG lens. (Photo by Robert Nickelsberg/Getty Images)

Getty Images

What is bitcoin?

Its proponents offer no shortage of answers: peer-to-peer cash. Digital gold. A hedge against inflation. But only in the inner bowels of the bitcoin rabbit hole have mainstream financial institutions begun to discover its most compelling use case: bitcoin as an ESG asset.

Could BTC = ESG? According to professional services firm KPMG, the answer is a resounding yes.

In a recently published report, KPMG makes the case that bitcoin can serve a number of ESG functions—from stabilizing power grids and driving investment in renewables to monetizing stranded energy and capturing methane. The paper coincides with new research from Cambridge University and Bloomberg Intelligence that reveals bitcoin’s environmental impact to be much smaller than previously thought. And it comes just weeks after BlackRock—the largest asset manager in the world and one of the leading proponents of ESG—announced that it had filed for a spot bitcoin ETF.


In the ongoing debate over bitcoin’s energy consumption, enough ink has been spilled and paper printed to be its own environmental issue. But in 2023, the winds are changing. Not only do they propel the turbines that power bitcoin mining—they are beginning to shift in the cryptocurrency’s favor.

KPMG’s report challenges conventional wisdom on Wall Street with a provocative thesis. In the words of its authors, “Bitcoin appears to provide a number of benefits across an ESG framework.” These benefits include:

Creating New Markets For Renewable Energy

Bitcoin miners can tap into any energy source, anytime, anywhere in the world. And they are in constant search of low-cost energy, which they increasingly find in under-utilized renewable sources, such as hydro, wind, geothermal, and solar.

Because they are subject to the whims of nature, windmills, solar panels, and dams often create energy when nobody needs it. This is known as “stranded energy,” and without a buyer, it goes to waste. Bitcoin, however, creates a robust marketplace for this kind of energy. Because the Bitcoin network runs 24/7/365, it can make use of renewable energy at all hours of the day and during any season of the year. Bitcoin’s flexible demand load not only can increase revenue for green power providers but can also encourage further investment in clean energy.

Stabilizing Power Grids

Matching supply with demand is one of the most significant challenges facing power providers. Too much energy production can overwhelm the grid. But so can too much demand. This is where bitcoin comes in.

Bitcoin miners can act as an energy sponge, soaking up excess energy when needed to prevent it from overloading the grid. But they can just as easily shut off at a moment’s notice when demand grows too high, as bitcoin miners did during a heat wave in Texas last month. The ability of bitcoin miners to do everything—or nothing—all at once is a boon to power providers. But it can also benefit customers by mitigating demand spikes to help keep prices low.

Reducing Methane Emissions

Methane is a significant driver of climate change. According to the KPMG report, methane is 80 times more potent than carbon dioxide and is responsible for approximately 30% of global warming. To make matters worse, landfills act as methane mega factories, spewing toxic gas into the air as a byproduct of the decomposition process.

So what to do about all this methane? Believe it or not, bitcoin fixes this.

Companies are finding ways to capture vented methane on landfills and then turning that methane into electricity. They then use that electricity to mine bitcoin. This practice both reduces carbon emissions and monetizes stranded energy by taking toxic fumes and converting them into digital gold. If the process can be scaled, it could forever change the way landfills operate.

Other firms are following a similar model by converting flared gas into electricity to mine bitcoin. Like methane capture, this process harnesses energy that otherwise would have gone to waste. Consider that the potential energy of flared gas in the US and Canada could power the entire bitcoin blockchain, according to Harvard Business Review.

A New Look At Bitcoin’s Energy Consumption

Alongside the KPMG report, researchers at Cambridge University and Bloomberg Intelligence are taking a closer look at bitcoin’s energy consumption. And what they are finding also challenges past assumptions on bitcoin and its environmental impact.

Of note, the Cambridge Center for Alternative Finance updated its methodology for calculating bitcoin’s global energy usage to better reflect differences across crypto mining machines. This led to a significant revision in its estimate of bitcoin electricity consumption in 2021—down from 114.0 TWh to 89.0 TWh. In other words, Cambridge overstated bitcoin’s electricity consumption that year by 15.0 TWh. To put that number in context, 15.0 TWh is enough electricity to power 1.4 million American homes for an entire year, according to the US Energy Information Administration.

New data from Bloomberg Intelligence is also reshaping bitcoin’s reputation on Wall Street. While environmentalists have pilloried the cryptocurrency in years past, new research shows that more than 50% of bitcoin’s power mix now comes from renewables. In retrospect, China banning bitcoin was a blessing in disguise for the network. That’s because the United States—which leads the world in sustainable bitcoin mining—hoovered up a significant portion of Chinese mining rigs, introducing more renewables into bitcoin’s energy mix.

Bitcoin > Solar?

New data and use cases have rewritten the script on bitcoin and the environment. Some climate-tech investors even believe that bitcoin is not only simpatico with an ESG framework; it is superior to existing ESG technologies. Daniel Batten, the co-founder of environmental investment fund CH4 Capital, is one of them.

In an interview, Batten explained to me that all climate-tech inventions have a carbon footprint at their inception. Solar, for example, only paid off its carbon debt in the 1990s—40 years after it was first invented. Batten believes Bitcoin is an ideal ESG technology because it won’t take nearly as long for the network to begin contributing to the environment in a positive way.

“As a technologist I’m used to taking a long-term view when evaluating a technology’s ESG credentials,” said Batten. “It’s clear to me that bitcoin can pay off its climate debt much sooner than solar energy, and because of its ability to mitigate methane, can address more urgent challenges.”

Batten believes in allocating capital where it will have the greatest impact from an environmental perspective. And by that metric, bitcoin again beats solar. Per Batten, “Our calculations show that investing in bitcoin mining powered by vented landfill gas is 45 times more emission reducing than investing in solar infrastructure deployment per dollar invested.”

The Bigger Picture

The environmental case for bitcoin is just taking root. But expect it to blossom in the months to come.

Why? Because watering the seeds will be the likes of BlackRock, Fidelity, ARK Invest, and other asset managers that have filed for a spot bitcoin ETF.

An ETF approval is likely to drive billions of dollars in institutional investment toward the world’s leading cryptocurrency. Key to onboarding investors big and small into the digital asset economy will be education, which entails correcting outdated narratives on bitcoin and the environment. Recognizing bitcoin’s emerging use cases as an ESG technology is a good place to start.

3 Signs Of Life: Crypto’s Regulatory Winter Gives Way To Bipartisan Spring


WASHINGTON, DC – House Financial Services Chair Patrick McHenry rallied bipartisan support to pass a … [+] comprehensive for digital assets—a sign that crypto’s regulatory winter may be starting to thaw.

Getty Images

“In the midst of winter, I found there was, within me, an invincible summer.”

Albert Camus’ words capture the resilience of the human spirit—but they just as well describe the last few weeks in crypto policy. From Bitcoin
ETF filings and Ripple’s court victory to legislative progress in both the House and the Senate, signs of life are emerging in the digital asset ecosystem. Indeed, there is mounting evidence that crypto winter, at least from a regulatory standpoint, has started to thaw.

From its inception, the digital asset industry has weathered multiple “crypto winters” Four, to be exact. Crypto winter describes the bust that follows the boom of each market cycle. These depression periods are marked by premature bitcoin obituaries, low trade volume, and flatlining public interest in the space.

What sets the current winter apart, however, is the brutal regulatory blizzard that began after the blowup of crypto exchange FTX.

With his bold “regulation-by-enforcement” approach, Securities and Exchange Chair Gary Gensler sought to corral crypto by asserting in February that every digital asset other than bitcoin was a security and should thus fall under the SEC’s control. The SEC then ordered Coinbase to delist all tokens but bitcoin (that’s 261 tokens in total), according to Coinbase CEO Brian Armstrong,

But Armstrong refused to comply with the order because, as he suggested in an interview with Financial Times, it would have led to “the end of the crypto industry in the US.” His resistance only emboldened the SEC further. The agency followed through on its charge by filing lawsuits against both Coinbase and Binance for allegedly selling unregistered securities.

While June was full of blue skies and blooming flowers in the real world, it was a bleak month for crypto. Between the SEC’s lawsuits and an increasingly vocal anti-crypto faction in Congress, the threats to the industry bordered on existential.

But Old Man Winter’s grip on crypto regulation has since appeared to loosen. Today, the industry’s prospects are remarkably sunnier than they were just a few weeks ago.

So what happened?

Consider three signs that crypto’s regulatory winter may be giving way to a bipartisan spring:

1. The Return Of ‘Smart Money’

and Vanguard are the two largest asset managers in the world. Between them, they manage more than $17 trillion dollars of the world’s wealth. And they both just placed big bets on crypto’s future.

The vibe shift began when news broke that BlackRock filed for a spot Bitcoin ETF with the SEC. In the previous crypto cycle, the narrative that fed the bull run was “the institutions are coming.” Now the institutions are here. Whether the SEC ultimately approves the ETF is less relevant. Why? Because the filing alone signals Wall Street’s acceptance of crypto as an asset class.

Vanguard answered BlackRock’s move by announcing a few weeks later that it had bought millions of shares in the two largest bitcoin mining companies in the United States—Riot Blockchain and Marathon Digital. Vanguard now owns a 10% stake in Riot alone, making clear that the firm expects another crypto bull cycle in the near future.

While this development didn’t move the policy need, it offered market participants hope that the asset class would survive its existential crisis. What did move the policy needle, however, was Judge Analisa Torres’ decision in the Ripple case that was announced just days later.

2. Ripple Effects From XRP Decision

The SEC’s claim that all digital assets other than bitcoin are securities sent a chill across crypto markets. But Judge Torres directly challenged Gensler’s claim in a historic decision for the industry.

In 2020, the SEC sued Ripple for allegedly issuing an unregistered security by selling its native cryptocurrency, XRP. But Torres rebuked the SEC in her decision, writing that “XRP, as a digital token, is not in and of itself a ‘contract, transaction or scheme’ that embodies the Howey requirements of an investment contract.”

Translation: XRP is not a security.

The ruling has significant implications for almost all digital assets. Why? Because if the ruling holds, it could vindicate not only XRP but other tokens singled out by the SEC for allegedly being unregistered securities. These include SOL
, and more.

3. A Resurgence Of Bipartisanship In Congress

Just when it appeared that crypto was starting to split along party lines—with Republicans being for it and Democrats being against it—a bipartisan duo in the Senate flipped the script. In July, Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) reintroduced the Responsible Financial Innovation Act, the most comprehensive crypto bill ever to come before the U.S.

The bipartisan momentum rolled into legislative efforts in the House of Representatives, where a half dozen Democrats joined their Republican colleagues on the House Financial Services Committee to advance a comprehensive regulatory framework for crypto assets. A handful of Democrats also voted to advance a bill regulating payment stablecoins, proving that neither bipartisanship nor crypto are dead.

Looking Ahead

These three developments taken on their own represent significant victories for the crypto industry. Taken together, they are a sign that the regulatory blizzard may be abating.

I reached out to Haun Ventures Chief Policy Officer Tomicah Tilleman to help make sense of the last few weeks in crypto. “The most recent crypto winter was accompanied by a mini-ice age in the world of crypto policy,” said Tilleman. “Fortunately, diverse coalitions of bipartisan lawmakers are now moving forward with serious legislation that would protect American consumers and the country’s capacity for innovation in an increasingly competitive global environment.”

I also asked Senator Cynthia Lummis for her thoughts. She too struck a tone of cautious optimism.

“The past few weeks have made it abundantly clear that there is an appetite in Congress to pass crypto asset legislation,” said Senator Lummis. “Just two weeks after reintroducing the Lummis-Gillibrand Responsible Financial Innovation Act, sections of the illicit finance title of the bill were included in the National Defense Authorization Act that the Senate passed. I’m encouraged by movement on crypto asset legislation in the House as well, and look forward to the Senate continuing work on this important issue.”

The Ripple Becomes A Wave: Why XRP’s Victory Lifts All Boats


SAN FRANCISCO, CA – Ripple CEO Brad Garlinghouse said Judge Torres’ decision in the SEC vs. Ripple … [+] case will benefit “all crypto innovation in the U.S.” (Photo by Steve Jennings/Getty Images for TechCrunch)

Getty Images for TechCrunch

Legal experts inked millions of words attempting to answer one of the thorniest questions in crypto: “Is Ripple’s XRP
a security?” But Judge Analisa Torres needed only 25 to resolve the issue once and for all.

In a historic court decision for the industry, Torres wrote, “XRP, as a digital token, is not in and of itself a ‘contract, transaction[,] or scheme’ that embodies the Howey requirements of an investment contract.”

In layman’s terms, XRP is not a security.

The decision caps a protracted lawsuit in which Ripple ponied up more than $200 million defending itself against the Securities and Exchange Commission. It is a resounding victory, not only for XRP holders but for the entire crypto industry. Indeed, the ripple effects from this case could become a wave that lifts all boats in crypto—starting with Coinbase

How Torres’ Logic Could Torpedo SEC Strategy

In her decision, Torres explains that XRP was a security when Ripple first sold it to institutional investors who had expectations of profit. But the token is no longer a security when it is sold among anonymous buyers and sellers on secondary markets (i.e., crypto exchanges).

This reasoning gives new ammunition to centralized exchanges in their legal battles with the SEC.

The SEC filed a lawsuit against Coinbase in June for allegedly selling unregistered securities. But extending the logic of Torres’ decision, Coinbase can now argue that the assets in question are not securities since they are being traded between blind parties on a secondary market. If the Torres ruling holds, it could therefore vindicate not only XRP but other tokens singled out by the SEC for allegedly being unregistered securities. These include SOL
, and more.

Essentially, Torres’ reasoning torpedoes the SEC’s suit against Coinbase. As Paradigm Policy Director Justin Slaughter wrote, “proving secondary sales of tokens are securities will be very hard under this logic. The SEC can appeal, but odds are, even if they win at the appellate level, they’ll lose at the Supreme Court.”

That’s because the Supreme Court in its conservative incarnation has taken a hatchet to federal agency overreach. And it is unlikely to look kindly on an SEC that has asserted it can regulate an entirely new industry without any help from Congress.

Ripple Reins In Gensler

The Ripple decision also strikes a huge blow to the SEC’s lobbying efforts on Capitol Hill.

“It destroys the narrative being pushed by SEC Chair Gary Gensler and Senator Elizabeth Warren in their anti-crypto campaign claiming all digital assets (except Bitcoin
) are securities and thus, fall under the jurisdiction of the SEC,” said John Deaton, a former federal prosecutor and the founder of CryptoLaw. “Judge Torres made clear XRP is not a security but a digital commodity or virtual currency. This is huge because the judge’s reasoning on why XRP is not itself a security applies equally to many crypto assets.”

Gensler has previously stated that “crypto markets suffer from a lack of compliance, not a lack of regulatory clarity.” But he can no longer make such claims in testimonies on Capitol Hill. Nor can he pretend to be the sole arbiter of crypto law since the Ripple decision erects strong boundaries between what the SEC can and cannot regulate in the world of digital assets.

Speeding Up The Legislative Timeline

Until now, lawmakers have taken their sweet time with crypto regulation—but the Ripple decision could change that.

If Congress doesn’t act, then the courts will. And the decisions the courts render could cause even greater confusion for the industry.

Why? Because a judge’s role under the Constitution is merely to interpret the law—not make it. And the laws we have on the books are ill-equipped to handle the promise and potential pitfalls of cryptocurrency. That’s why Congress needs to step in.

In this regard, the Ripple decision could speed up the timeline for acting on legislation, especially for congressional Democrats. Recognizing the need to protect investors in the wake of this decision, Democrats will likely be more inclined to negotiate.

Or not.

If the Ripple decision can’t get legislators to act, it’s unlikely anything will before the next election. But if they do decide to act, expect a wild policy duel on Capitol Hill over the next few days.

Lummis-Gillibrand Bill Resurrects Bipartisan Hopes For Crypto


UNITED STATES – Sen. Cynthia Lummis has partnered with Sen. Kirsten Gillibrand to breathe new life … [+] into the bipartisan conversation on crypto on Capitol Hill. (Bill Clark/CQ-Roll Call, Inc via Getty Images)

CQ-Roll Call, Inc via Getty Images

“Crypto is dead in America.”

So declared billionaire investor Chamath Palihapitiya during an episode of the All-In podcast earlier this year. His obituary was just one of hundreds written for the industry since its inception. But like the Rolling Stones, Marvel superheroes, or Mariah Carey’s immortal ode to Christmas, crypto never actually dies—it just takes breathers between dramatic performances.

Might the same be true for crypto bipartisanship?

The Biden administration’s clampdown on crypto has fueled a narrative that support for digital assets is starting to split along party lines, with Republicans being for it and Democrats being against it. But new legislation in Congress directly challenges that idea. The Responsible Financial Innovation Act—which Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) are reintroducing today—is the most comprehensive crypto bill ever to come before the U.S. Senate. It is also the most bipartisan.

Digital Assets Find A Dynamic Duo

Senators Lummis and Gillibrand are natural choices to spearhead the upper chamber’s efforts on digital asset regulation. Lummis is a crypto native, having bought her first bitcoin as early as 2013. Dubbed the Senate’s “crypto queen,” Lummis has been instrumental in establishing Wyoming as an innovation hub for crypto miners and entrepreneurs.

Gillibrand, meanwhile, helped lead the charge in cracking down on insider trading in Congress when she was a member of the House of Representatives. Given her legal background and her previous work on securities legislation, she brings particular expertise to the million-ether question: “Is cryptocurrency a commodity or a security?”

Together, Lummis and Gillibrand have kept the fires of bipartisanship alive amid the bleakness of crypto winter.

‘The Best Shot Of Becoming Law’

Keep in mind that the House of Representatives is working on its own crypto framework with the McHenry-Thompson bill. The Lummis-Gillibrand bill departs from McHenry-Thompson on several key points. But perhaps the biggest difference between the two proposals isn’t policy—it’s bipartisan support.

McHenry-Thompson needs to garner the endorsement of more Democrats if it is to eventually clear the House and pass the Senate. By contrast, bipartisanship is built into the Lummis-Gillibrand bill—and this could significantly improve its long-term prospects.

“It has become abundantly clear that we need regulatory rules of the road in the crypto asset industry, and a bipartisan solution that protects consumers and encourages innovation has the best shot of becoming law,” said Senator Lummis.

So what’s in the Lummis-Gillibrand bill? And how is it different from the 2022 version? Here are three facts you need to know:

1. Preventing Another FTX

The 2022 version of the Lummis-Gillibrand bill was picking up significant momentum in the last Congress—but the implosion of crypto exchange FTX put the proposal on ice. The FTX debacle underscored the need to bulk up customer protections. To that end, the new version of Lummis-Gillibrand puts retail investors front and center by aiming to prevent another FTX.

Among other egregious crimes, FTX CEO Sam Bankman-Fried reportedly transferred more than $10 billion in customer funds from his fallen crypto exchange to his hedge fund, Alameda Research.

  • That’s why Lummis-Gillibrand explicitly prohibits the mixing of customer funds by imposing mandatory segregation and third-party custody requirements for crypto exchanges.
  • It also sets limits on digital asset lending and empowers the Commodity Futures Trading Commission to police potential conflicts of interest between crypto exchanges and affiliate companies.
  • Likewise, the legislation requires these companies to show proof of reserves.

2. Settling The Security Vs. Commodity Debate

Many cryptocurrencies occupy a regulatory no man’s land, displaying properties of both securities and commodities. Lummis-Gillibrand recognizes this fact and seeks to bring clarity to the industry by creating a new classification status for certain cryptos—“ancillary assets.”

  • Ancillary assets would include “digital assets that are sold pursuant to investment contracts but do not provide their holders with financial interests in a business entity,” according to a report from the Congressional Research Service.
  • As long as these ancillary assets comply with SEC disclosure requirements, they would be regulated as commodities.
  • The big takeaway: ether and similar cryptocurrencies would likely be treated as commodities under the Lummis-Gillibrand framework.

3. Stabilizing Stablecoins

Stablecoins have not always lived up to their name (looking at you, TerraUSD). That’s why, to protect investors, Lummis-Gillibrand prohibits algorithmic stablecoins from using the term “stablecoin” at all.

At the same time, the bill recognizes the utility of payment stablecoins and their potential to reduce friction in the dollar economy.

  • In an effort to increase trust in these digital assets, Lummis-Gillibrand requires that all stablecoins be issued by banks or credit unions.
  • These banks must also prove that their stablecoins are backed 1:1 by high-quality liquid assets so that customers can redeem them for U.S. dollars at any given time.
  • Under the Lummis-Gillibrand framework, stablecoins issued by these banks would be considered neither securities nor commodities.

Looking Ahead

The House has dominated the crypto discussion in 2023—but Lummis-Gillibrand is a critical addition to the debate.

Admittedly, the Lummis-Gillibrand proposal still has several hurdles to clear before becoming law, not least of which is Senate Banking Committee Chair Sherrod Brown (D-OH). Brown has long been an outspoken critic of crypto, so whether Lummis and Gillibrand can sway him on different points of this legislation is an open question. Brown could very well stonewall the bill. But its prospects could shift entirely if the committee’s leadership changes in 2024—something the bill’s supporters may be banking on.

Lummis and Gillibrand are likely playing the long game with this legislation, knowing full well it may not pass this Congress—or that only bits and pieces of it may be folded into an end-of-year spending package. But no matter the ultimate outcome, the bill has already succeeded by breathing bipartisan life into the crypto conversation on Capitol Hill.

From Ally To Adversary: The 3 Stages Of Gary Gensler’s Crypto Evolution


WASHINGTON, DC – SEC Chair Gary Gensler has cultivated close ties with members in both chambers of … [+] Congress, where his influence looms large in shaping crypto policy. (Photo by Chip Somodevilla/Getty Images)

Getty Images

Quis custodiet ipsos custodes? Who watches the watchmen?

The age-old question has become all the more relevant as the federal bureaucracy balloons in both budget and size.

But as the U.S. government has grown, so too has the influence of the Fourth Estate. Social media has empowered a new generation of citizen journalists to hold officeholders to account by shining a spotlight on their past positions. And in recent weeks, that spotlight has been fixed on Securities and Exchange Commission Chair Gary Gensler.

As the SEC buckles down on digital assets, members of Congress have pressed Gensler on his shifting positions on crypto over the years. Contradictions between Gensler’s past and present statements have surfaced on Twitter, thanks to the crowdsourced work of professional journalists and amateur sleuths alike. Together, this decentralized community is dutifully watching the watchmen.

And what have they found? A remarkable evolution in Gensler’s views on crypto. Below is a timeline of his long arch from industry ally to apparent adversary.

Stage 1: The Ally (2018 to 2020)

While Gensler’s recent enforcement actions have painted him as an industry foe, that wasn’t always the case. Many crypto leaders once regarded him as a forward-thinking regulator and a friend of the space—and not without reason. Before taking over at the SEC, Gensler spent three years in academia, where he built a reputation as a public leader who saw the innovative potential of digital assets. Consider the events below:


  • Gensler gives a presentation before a group of hedge fund managers on the policy implications of emerging cryptocurrencies. In his remarks, he states definitively that bitcoin, ether, litecoin, and bitcoin cash are “not securities.” With these tokens comprising the bulk of crypto trade volume at the time, he says that “three-quarters of this market is probably not securities.”
  • This same year, Gensler begins research on digital assets at the Massachusetts Institute of Technology, where he also teaches the university’s Blockchain and Money course. While there, he delivers a lecture in which he publicly grapples with the question, Is cryptocurrency a security or a commodity? His reply: “It’s both. I know that’s not an answer that a lot of people like, but that’s kind of where we are right now.”


  • Gensler speaks at a fintech conference in New York City, where he heaps praise on Algorand
    and its lead developer, Silvio Micali—Gensler’s then-colleague at MIT. Gensler calls Algorand’s project “a great technology” and a blockchain so efficient “you could create Uber
    on top of it.”
  • This same year, according to lawyers at Binance, Gensler offers to advise the crypto exchange, even meeting with Binance CEO Changpeng Zhao for a special meeting in Japan. (To this day, Gensler has yet to refute the claim).


  • Gensler teaches his last course on Blockchain and Money at MIT in the fall. His lectures, which are available online, lead many to believe he will take a pro-innovation approach to crypto if he re-enters public service. With President Joe Biden winning the election, speculation grows that he will tap Gensler to lead the SEC.

Stage 2: The Agnostic (2021-2022)

Sure enough, President Biden appoints Gensler as SEC Chair. Given Gensler’s past statements and praise of various crypto projects, many leaders in the digital asset community cheer the announcement. Senator Cynthia Lummis, for example, tweets: “While the SEC has a reputation as a black hole for innovators, Gary Gensler recognizes the potential of digital assets.”

Indeed, the mood on Capitol Hill with Gensler’s ascension is one of sunny optimism. But shortly after taking office, Gensler’s attitude towards crypto begins to change.


  • In both press statements and public remarks on digital assets, Gensler’s tone shifts from one of openness to skepticism—and in some cases, hostility.
  • The SEC Chair begins signaling the need for more regulation, calling crypto a “Wild West” fraught with fraud and abuse. He goes further by saying, “I believe we have a crypto market now where many tokens may be unregistered securities.”
  • Still, Gensler admits that digital tokens are suspended in a state of regulatory limbo. And he says that legislation from Congress would be helpful in providing greater clarity to the industry since “exchanges trading in these crypto assets do not have a regulatory framework either at the SEC, or our sister agency, the CFTC.”


  • Gensler doubles down on the “Wild West” narrative, and his tone hardens. “Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities,” says Gensler in a September speech before the whole agency. Just a month later, crypto exchange FTX goes belly up, vindicating some of Gensler’s claims.

Stage 3: The Adversary (2023-Present)

After the FTX debacle, the gloves come off as Gensler’s skepticism turns to opposition. His agency tires of waiting for Congress to pass legislation, and instead, assumes a regulation-by-enforcement approach that entails a series of Wells notices and lawsuits against high-profile crypto exchanges.

There’s just one problem—the new tack requires Gensler to swallow whole many of his previous statements on crypto.


  • In a noticeable departure from his 2018 statements that several major cryptocurrencies are not securities and that many tokens have the characteristics of commodities, Gensler muses in an interview with New York Magazine that “everything other than bitcoin” is a security.
  • Contradicting his own request in 2021 that Congress pass legislation to provide greater clarity for the digital asset industry, Gensler says that “crypto markets suffer from a lack of regulatory compliance, not a lack of clarity.”
  • While Gensler asserted in 2021 that digital assets lack a clear regulatory framework at the SEC, he now argues that “The law is clear,” and all crypto exchanges must register with the agency.
  • Although Gensler offered to serve as an advisor to crypto giant Binance in 2019. his agency is now suing the company for alleged market manipulation and misuse of customer funds. The SEC is simultaneously suing Coinbase for listing what the agency considers to be “unregistered securities.”
  • Speaking of unregistered securities, the SEC alleges in a lawsuit that ALGO is exactly that. Bear in mind that ALGO is the native token of Algorand—the same protocol Gensler praised in 2019 as a groundbreaking technology.

Gensler’s Anchor Strategy

So what gives? Why Gensler’s sudden about-face?

Odds are, there’s a coherent strategy behind his contradictory statements.

As a seasoned bureaucrat, Gensler understands better than most how negotiations work in Washington. Effective policymakers employ a negotiating technique called “anchoring,” in which they set their first offer far away from the expected outcome. (Think Representative Alexandria Ocasio-Cortez’s Green New Deal or the original $3.5 trillion price tag on President Biden’s Build Back Better plan).

These initial proposals are often outlandish and have virtually no chance of becoming law. But they set a reference point for negotiations and give the appearance that the proposing party is making significant concessions as policy inevitably moves towards the middle.

This is the likely logic behind Gensler’s actions at the SEC. By taking the hardline position that “everything other than bitcoin” is a security, he has set the frame of the negotiation and all but forced Congress to take action on legislation.

Enter ‘Digital Commodities’

Congress’s response to Gensler is the McHenry-Thompson bill, which (far from labeling everything but bitcoin a security) carves out a wholly new asset class known as “digital commodities.” Many existing tokens meet the definition of digital commodities outlined in this bill and will therefore fall under the purview of the Commodity Futures Trading Commission—not the SEC.

The McHenry-Thompson bill is the most comprehensive crypto framework ever to come before Congress. It has strong support in the House, but it could face significant opposition in the Senate, where Democrats have shown deference to Gensler on many questions related to digital assets. So if the legislation passes this Congress (a big if), it would likely be in a diluted form.

The other option for the bill’s supporters is to hope for a more crypto-friendly Congress in 2025. But this is assuming the industry can absorb another 18 months of heavy blows from the SEC. A rope-a-dope strategy is risky in any circumstance—but it’s even riskier against a fighter as formidable Gary Gensler.

Crypto War: The Secrets Behind Gary Gensler’s SEC Strategy


WASHINGTON – SEC Chair Gary Gensler has proven adept at leveraging media to bring greater attention … [+] to his policy aims. (Photo by Alex Wong/Getty Images)

Getty Images

June means hot weather and summer footwear. Flip-flops are out in full force—but they appear to be especially fashionable at the Securities and Exchange Commission.

In a newly surfaced video from 2018, Gary Gensler—who now serves as Chair of the SEC— definitively states that bitcoin, ether, litecoin, and bitcoin cash are “not securities.” It’s a far cry from his current position on the issue. As recently as February, Gensler mused in an interview with New York Magazine that “everything other than bitcoin” is a security.

Last week only added to the confusion with the release of the infamous “Hinman documents,” which serve as key evidence in the SEC vs. Ripple case. Most notably, these documents show SEC officials identifying a “regulatory gap” in securities law when it comes to classifying digital assets. The emails reflect a lack of consensus among regulators as to which cryptocurrencies are securities and why.

And yet, Gensler has taken the public position that no ambiguity exists at all: crypto platforms are, in effect, securities exchanges, and their activity falls under the sole purview of the SEC. According to Gensler, “Crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity.”

But the Hinman documents show that his own agency was grappling with the legal gray area surrounding digital assets in 2018. In that same year, Gensler himself said in a presentation to a group of hedge funds that “Three-quarters of this market is probably not securities.” Here, he was referring specifically to the big four digital assets that dominated trading volume at the time: bitcoin, ether, litecoin, and bitcoin cash.

All this raises the question: What happened?

How did Gensler make the logical jump from “Three-quarters of this market is probably not securities” to “Everything but bitcoin” is a security in just a few years? Does this evolution reflect a genuine change of mind on Gensler’s part? Or a strategic calculation to expand his political capital inside the Beltway?

Inside The Mind Of Gary Gensler

Both the timing and substance of the SEC’s enforcement actions against crypto suggest that Gary Gensler is no run-of-the-mill regulator—he’s a wily political operator and a media maven.

From an early age, Gensler demonstrated a knack for political maneuvering inside large organizations. He became a partner at Goldman Sachs at just 30 years old, making him the youngest partner in the firm’s history at the time. After building a fortune on Wall Street, he decamped to DC, where he served in the US Treasury Department as the Assistant Secretary for Financial Markets under the Clinton administration. There, he would cut his teeth in policymaking.

By Gensler’s own admission, he was a policy novice when he first came to Washington in the late ‘90s. But in a lecture from his Blockchain and Money course at MIT, Gensler describes “an old wonderful, political lawyer from Texas” who took him under his wing and taught him how to play the game.

Gensler’s mentor schooled him on the importance of effective messaging: “Young man, you know nothing about this town. You don’t get your message right, you’re not going to get to your politics. If you don’t get your politics right, you’ll never get to your analysis and your policy.”

Gensler appears to have taken these words to heart. He knows how to play the media game today perhaps better than any agency head in Washington. To use his own words, the crypto industry is teeming with “Hucksters. Fraudsters. Scam artists. Ponzi schemes.” And he has launched a PR and legal assault against the industry to drive that point home.

Catching Up With The Kardashians

How do you guarantee national headlines for a niche policy issue that few people outside of Washington care about? Suing a Kardashian is a good place to start. Gensler did exactly that last fall. The SEC charged Kim Kardashian for using her social media to bring attention to crypto platform EthereumMax without disclosing payment.

From that point on, Gensler has commanded the mainstream narrative around crypto—and Congress has been all but powerless to stop him.

Each time Congress has attempted to move the ball forward on policy, it has been sacked by the SEC. Consider a few examples:

  • The same day the House Financial Services Committee announced a subcommittee on digital assets, the SEC announced it would be suing crypto giants Genesis and Gemini for allegedly selling unregistered securities.
  • A month later, the SEC undercut Congress again when it issued a Wells notice to stablecoin provider Paxos. This was just two days before a House Financial Services hearing on—you guessed it—stablecoins.
  • Earlier this month, the House of Representatives unveiled a discussion draft of the McHenry-Thompson bill—the most ambitious crypto legislation ever to come before Congress. But the SEC answered this move with the most ambitious litigation filed against crypto companies in the United States—twin lawsuits against Binance and Coinbase.

In short: Congress is running an empty backfield formation—and Gensler is blitzing every time. That Congress telegraphs its plays by announcing the subject of hearings well in advance gives Gensler an added advantage. He’s able to read the offense quickly and shut it down almost as soon as the ball is snapped.

SEC Smokescreen?

The question is, “Why crypto?”

Gensler oversees a US capital market worth more than $40 trillion, of which digital assets would make up only a tiny fraction. And yet his crackdown on crypto is fast becoming his legacy as SEC Chair.

It’s possible that this could all be an act of misdirection. As Paradigm Policy Director Justin Slaughter tweeted, “If we’re discussing the SEC’s enforcement actions against key crypto companies, we’re not discussing the McHenry-Thompson bill. But we’re also not discussing the SEC’s failure to finish most of the rules on its very large agenda, from ESG to market structure.”

Beyond failing to deliver on ESG and market structure reforms, major banks have melted down under Gensler’s watch. Yet he has been able to avoid the media spotlight largely by pointing it toward crypto instead.

Simultaneously, he has built a rock-solid reputation among progressives as a no-nonsense regulator. House Democrats frustrated with the slow pace of financial reforms on Capitol Hill have found a useful whipping boy in crypto. Crypto has nowhere near the influence and lobbying power of traditional banks, making it an easy target for Congress and federal agencies alike. And directing the fire is Gensler.

Courting Congress

Gensler has cultivated cozy relationships with members in both the Senate and the House to increase his pull in both chambers. Ensuring greater policy coordination between the SEC and the Senate Banking Committee, he tapped Corey Frank—a former top aide to Senate Banking Chair (and notable crypto critic) Sherrod Brown—to help lead the agency’s approach to digital assets. This is in addition to his close ties with Senator Elizabeth Warren, another prominent member of the Senate Banking Committee who recently vowed to mount an “Anti-Crypto Army.” Meanwhile, Gensler has courted Democrats on the House Financial Services Committee so successfully that they have begun to parrot his talking points in internal memos and committee hearings.

If policy is like painting, then Gensler is a Picasso. The media is his brush, and Congress is his canvas.

By fortifying relationships with Democratic power players, Gensler has positioned himself well for a future promotion—be it in this administration or another one. His resume puts him in top contention as a future Treasury Secretary or as an ambassador in a prestigious European or Asian post.

And herein lies the irony: Gensler’s attack on digital assets poses an existential threat to the industry. But for him, it may well be just a stepping stone on the path to higher office.

Whether he gets his way in corralling crypto is ultimately for Congress and the courts to decide.