Molly White's Citation Needed - When did cryptocurrency policy become a voter issue?

Episode Date: July 29, 2024

I don’t believe that it has. In addition to all the spending, the cryptocurrency industry has been working overtime to sell a story: that there is a large contingent of voters who will be strongly factoring in candidates’ crypto policy stances when they vote in the upcoming elections. The problem is, it’s a story that does not seem to be well supported by data.Originally published on July 29, 2024.

I'm Molly White, and you're listening to the audio feed for the Citation Needed Newsletter. You can see the text version of the newsletter online at citation needed.news. When did cryptocurrency policy become a voter issue? I don't believe that it has. Donald Trump announcing two raucous applause from a room full of bitcoinsers, his new campaign promise that, quote, on day one, I will fire SEC Chairman Gary Gensler, and install, quote, people who love your industry to write the rules. Rumors that Kamala Harris' campaign is contacting cryptocurrency companies, seeking a so-called reset

in the relationship between Democrats and the industry. Congressional hopefuls, adding to their platform's unexpected promises about supporting blockchain innovation. Especially combined with a broad perception among everyday people that cryptocurrency is a year's old fad that died off somewhere between NFTs becoming cringe and FTX exploding, I'm seeing a lot of confusion. When did cryptocurrency suddenly become a major issue for U.S. voters? I don't believe that it has. So far, the industry has had some undeniable success in making cryptocurrency a conversation topic in this election, grabbing the attention of politicians and their campaign strategists, primarily through the massive political spending coming out of the industry. It's certainly been enough to cause Trump, who described Bitcoin

as, quote, a scam only three years ago to make a U-turn on his position. A Bitcoin, it just seems like a scam. I was surprised, you know, with us it was at $6,000. And I don't like it because it's another currency competing against a dollar. Essentially, it's a currency competing against a dollar. And at the more local level, congressional candidates are squabbling about cryptocurrency in front of their sometimes baffled constituents, as the industry has shown willingness to pour millions of dollars into out-of-state races where a candidate looks like they could be an ally. But headlines are not votes, and it's not clear these conversations are actually helping politicians. Even among crypto advocates, there are murmurs about politicians pandering to them

without understanding or caring about the topic, and some have remarked on the irony of prominent figures in a supposedly anti-establishment group going all in behind various members of the establishment. Outside of crypto, some among the 69 to 75% of Americans who view crypto negatively or distrust it are watching with disgust as politicians appear to sell out in hopes of receiving a sliver of the more than $180 million the industry has raised for political spending so far. The story. In addition to all the spending, the cryptocurrency industry has been working overtime to sell a story, that there is a large contingent of voters who will be strongly factoring in candidates' crypto policy stances when they vote in the upcoming elections.

It's hard to tell from the outside, whether the politicians who've taken a sudden interest in the topic are mostly just interested in obtaining access to the very large pool of funds, or if they're actually buying the story. But it does seem that the story has gained some traction. The problem is, it's a story that does not seem to be well supported by data. Most of the data around voter opinions on cryptocurrency comes from industry-funded surveys, which makes it challenging to get a proper view into the topic. The most recent and comprehensive is an April 2024 survey funded by the Digital Currency Group

and published by the Crypto Lobbying Group, the Blockchain Association. It was performed by the Harris poll, not an unknown entity at least, but one with a middling 1.6 out of three stars confidence score in 538's pollster ratings, and one that has earned criticisms for flaws in another recent survey. The DCG report is not shy about aiming its messaging directly at politicians, trying to convince them of a crypto voting block that, A, exists, and B, overlaps with demographic groups that politicians are often more aggressively trying to win over. A key findings page in their report reads, Crypto as a voting issue could present a key opportunity for political candidates,

and some notable demographic groups are more open to crypto, going on to describe that crypto-positive voters are more likely to be male, younger, black, or Hispanic, and are less likely to have a four-year college degree compared to voters overall. A glance at the survey design quickly revealed the story the industry was hoping to tell with the results, asking respondents to agree or disagree with statements like, quote, crypto is more equitable than the traditional financial system, and quote, crypto represents a new way towards financial security and prosperity.

Even more profound are the kinds of questions that were not included, which could have provided a clearer, but perhaps unwanted, view of voters' actual beliefs. While the poll invited respondents to agree or disagree with the statement, quote, crypto is a major issue I'm considering during the next election, they failed to distinguish between respondents who viewed crypto negatively or were hoping for stricter regulations on the industry and those who might support crypto-friendly candidates. There were no questions inquiring about how people prioritized cryptocurrency alongside other common election issues, and there were no questions aimed at determining if a respondent might be willing

to overlook other policy disagreements or partisan alliances if a candidate aligned with them on crypto. Furthermore, the summary of survey results betrays the industry's attempt to present this seemingly manufactured narrative. Without digging into the numbers, the survey summary seems to support the industry's story, that there is a sizable group of voters, in swing states, no less, looking for any crypto-friendly candidate they can support. The numbers, on the other hand, reveal that 69% of the survey respondents held a negative opinion of cryptocurrency. And nowhere does the survey mention that out of the 252 people

who responded that crypto is a major issue I'm considering during the next election, 100 of them held a negative opinion of the asset class. 52 million Americans own crypto. The American cryptocurrency exchange Coinbase, which is behind the stand with crypto advocacy group and SuperPack, loves to trot out the figure, 52 million Americans own crypto. This would suggest that more than 20% of adult Americans hold crypto. Other, even higher figures have been presented, including those as large as 100 million, or more than one third of the adult population.

The thinking goes, if such a large proportion of Americans own crypto, surely they will support crypto-friendly candidates at the ballot box. The number is, however, highly dubious. The 52 million figure comes from a 2023 Coinbase-funded survey that dramatically contradicts other surveys, such as a report from the Federal Reserve that found that only 7% of adults had engaged in any use of cryptocurrency that year, including buying or holding, and furthermore, that the figure was shrinking.

The Fed survey also notes that the number, that their number may skew high because the survey was conducted online. Statistician David Marker recently opined in an interview with Jake Donahue. Quote, this survey has not provided enough information to refute claims of it being low quality and spurious. Morning Consult hasn't presented evidence to make you feel comfortable with a survey which was funded by an organization which would like and benefit from these results. Marker then noted his concerns that there may have been a serious sampling flaw in Morning Consult's survey that, if it exists, would invalidate the numbers entirely.

Although Donahue was able to discuss the survey with Morning Consult, they stopped responding when he asked about their sampling and methodology and never responded to his follow-up inquiries. A Reality Check While there is certainly a group of cryptocurrency industry figures and crypto holders who are prioritizing above all else their hopes for a change in the federal regulatory posture towards the cryptocurrency industry, it seems to be a small, if loud and wealthy one. Many of these people already held political beliefs that aligned well with the candidates who are coming out most vocally in support of cryptocurrency, whether it's Vivek Ramoswamy,

Robert F. Kennedy Jr., or now Donald Trump. But it is also important to separate the Bitcoin billionaires and the wealthy executives in the cryptocurrency industry from the much larger group of people that the industry is claiming are mobilizing on their behalf. As I noted a few weeks ago, it's interesting to me that even some on the more ideological end of crypto see billionaire executives and VCs spending money on politicians and go, yes, good, they're fighting for me. While some have indeed chosen to align with these executives, either believing what they say about fighting for broad crypto freedoms, or in apparent hopes of trickle-down policies that will benefit them too, others recognize that executives fighting to install politicians they think will help their businesses

are well-divorced from their own interests. Even some of the wealthy and powerful in the space, such as Ethereum co-founder Vitalik Buterin, have noted that the industry's priorities seem misplaced, focusing far more on money than on related and important political issues around freedom and privacy that the industry claims to champion. The average cryptocurrency holder, those people who make up the majority of the 52 million or 18 million or whatever the actual number of holders may be, is not likely to be a single-issue voter. Many people who hold crypto, a group I will note of which I am apart, probably don't identify as crypto advocates at all. They're worried about the climate or their right to own firearms or the safety.

in support of transgender people, or the various wars and genocides playing out across the globe with the support of the United States, or reducing corporate taxes, or their ability to obtain an abortion, or retain access to contraceptives, or access to school vouchers, or any of the many other issues that factor in when people choose which candidates to support and oppose. Because we are wanting of any proper survey data, I am left to merely hazard and informed guess that few crypto holders, self-identified advocates or otherwise, are willing to set aside all of their other political beliefs and priorities in favor of a candidate's crypto stance. Regardless of the caricatures that have emerged, most cryptocurrency holders are pretty normal people,

with nuanced political beliefs and hopes for the future that go far beyond the tokens they hold in their digital wallets. Thanks for listening to this issue of the citation-needed newsletter. To learn how to support my work, visit mollywhite.net slash support. If you'd like to read the text versions of these episodes, sign up to receive the newsletter in your email, or support my work on a recurring basis. Go to citation needed.news.