The Breakdown - Crypto's Crossroads for Democrats

Episode Date: May 11, 2025

Democrats are at a critical crossroads: Can embracing decentralized crypto reshape their electoral future? This Long Read Sunday dives into how crypto represents not just an emerging technology but a political opportunity to reclaim young voters lost in recent cycles. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Sunday, May 11th, and that means it's time for Longreed Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly. slash breakdown pod. All right, friends, for this Long Read Sunday, we are getting a little bit political. The piece is by Berkeley Law Lecturer Hermione Wong and is titled how the Democrats' path

to 2026 victory goes through decentralized crypto. The current draft of the Genius Act elevates centralized entities and overseeing stable coins. Democrats should take the right stand against it. So let's turn it over to the 11 Labs version of myself, and then I will come back and provide my own thoughts. The latest crypto and Congress news is all about the Senate Democrats getting cold feet on the Stablecoin bill, the Genius Act, the same bill they voted for just two months ago. Why the flip-flop? Because they don't like Trump and they think the bill will help him profit. Why the Democrats keep hitting replay on this losing message is beyond me. Hating on Trump does not win elections. Just refer to the electoral bloodbath of 2024. But here's the kick

Crypto isn't the threat, it's the opportunity. If Democrats dropped their losing soundbites long enough to really learn crypto, they wouldn't just write better policy. They'd rewrite their political future in 2026. Section by the numbers. In 2024, Democrats lost a generation. Young men who had historically leaned in hard for Democrats fled. In just four years, young men went from backing Biden to giving Trump a 30-point swing, flipping hard against the very candidate they once rejected. While there's plenty of soul-searching to be done about why, one answer is hiding in plain sight. Crypto. Yes, crypto. And despite Big Crypto's talking points, it's not because young male voters are single-issue crypto voters. They're not. It's because crypto, like other

emerging technologies of the past, reflects generational and gender divides that mirror the trends we're seeing among young male voters. According to a Pew Research Center survey, 41% of young men have used crypto. This is orders of magnitude greater than young women, 16%, and people over 50, 8%. So even if that young male voter isn't holding crypto himself, 42% of his peer group is, it's in his social media feeds, his podcast rotations, his group chats. And right now, he's hearing only one side of the story because Democrats have refused to learn the tech. It's important to remember that these young men aren't all online crypto scammers. They are the same ones who overwhelmingly share democratic values

such as basic health insurance is a right and the government should spend more to reduce poverty. The Democrats can keep calling crypto a criminal enterprise over and over, but it doesn't make it one. The only effective thing it does is tell all young men that the Dems want to cancel them, and we've seen how young men have punished them for it at the voting booth. Section.

Mistaking Trump for Crypto. Let's say the quiet part out loud. The crypto natives don't want to see Trump as the face of this community. He and his family are promoting the same kind of rugpole projects that the crypto community has spent years battling. So why did young men vote for him? Because even with the grifting, he isn't completely ignoring them, or worse, pretending they're something they're not.

Go to any crypto meetup or conference, and you'll know that the builders aren't about hype tokens or centralized projects propped up only by endorsements. Crypto is about giving people control of their money, their data, and their digital identity. The ethos is grounded in the earned distrust of centralized institutions, Wall Street, big tech, and the federal government, most recently proven by the speed of Doge's access to all of our data. The communities oft-quoted mantras prove the point, don't trust, verify, not your keys, not your coins. If you don't know where the yield comes from, you are the

yield. These are not the vibes of blind allegiance. The crypto community was born out of the 2008 financial crisis, when banks collapsed under their own misconduct and taxpayers footed the bill. Embedded within Bitcoin's Genesis block is the hard-coded reminder, the Times 3rd January 2009, Chancellor on brink of second bailout for banks. The Democrats' insistence of conflating that community with Trump's opportunism is lazy. The obvious consequence has been to push away the very voters they desperately need. Section. The fix is simple, but time limited.

Sure, some politicians may be a little scared of the campaign money involved. Crypto packs have raised over $260 million, making crypto the sixth largest superpack, dwarfing any other industry-supported superpack, all the others are related to a particular party or candidate. But those donations came from just 50 individuals. That's not a movement. It's a small elevator lobby. Meanwhile, there's a whole voter base of millions of young men who turn to crypto because of their

mistrust of Wall Street and Big Tech. The same mistrust Democrats share of those same centralized entities. Democrats don't have to embrace hype coins or endorse bad legislation. In fact, they shouldn't, but they do need to actually learn to embrace the core values of the builders in the crypto community, individual digital ownership and decentralization. Democrats also need to start demonstrating this now. They can't risk another cycle without bringing young men back under the tent. One cycle can be a blip, but two cycles in a row becomes a habit, and habits are hard to break. Section. The Course. Correction. The Genius Act is actually the perfect opportunity for the Democrats to show that they're a party that is more interested in voters than soundbites against Trump.

The current draft is 57 pages of legislative jargon to elevate the roles of centralized entities in overseeing stable coins. No surprise. Remember those 50 individuals who raised $260 million for the crypto super PAC? They'll definitely benefit from an increased reliance on their intermediation. But embedded in the draft legislation is a small definition that is doing a lot of work, and that's the definition of distributed ledger. Instead of hating on Trump, the Democrats could ban together to say that the definition doesn't require decentralization or network security,

and until that happens, they can't advance a stable coin bill that only promotes fee-taking central intermediaries. Now, that could be the beginning of a real sea change. The Democrats wouldn't even need to mention Trump. The reality would be that none of the Trump family crypto projects would survive a definition that required true decentralization. So here's the real question. Do Democrats want to keep losing elections just to avoid learning new tech?

Or are they finally ready to act like a party that wants to win votes again? All right, back to Real NLW here. There are a couple things going on. Obviously, this show is not a political show, but Hermione is making a political point here, summed up in the line, hating on Trump does not win elections. Just referred to the electoral bloodbath of 2024. Rather than debating it, let's start from the presumption that Democrats decide that they need something to stand for rather than just fighting against this person.

This will certainly be true, assuming that 2028 goes as planned, and there is not another President Trump as a candidate. And Hermione's point is that crypto actually looks kind of appealing as a win. to win back audiences that have left. I think an important point that she makes is that this is not about young men being single-issue crypto voters. Instead, she says that crypto is emblematic of a wider set of issues. And that's an important distinction. The Democrats have for a very long time sort of seem to think that crypto is a can't-lose issue, that it's more useful for scoring points with their base than it is in losing points with others. And I don't think that that's

necessarily true. I think there's a lot to suggest that the last presidential election suggests that that's wrong. But it does seem that they're kind of retrading that same territory. Obviously, earlier this week, we had Maxine Waters lead a walkout during a crypto hearing because of Trump and the Trump family's association with their meme coins and World Liberty FI and all these other projects. The point that I made when we were discussing that earlier in the week is that actually, I think that there would probably be a lot of bipartisan consensus around rules that limit how elected officials interact with assets like crypto, given that people, by and large, on both sides of the aisle, support the same sort of rules when it comes to stocks.

People don't like elected leaders getting to put their thumb on the scale and personally benefit from their positions in such a direct and kind of grifty way. It's why you have the Nancy Pelosi stock tracker and things like that as well. It's all part of the same critique. As Hermione points out, there are tons in crypto, including Trump supporters, who do not like the meme coins and the approaches that they're taking. And so the mistake here would be for Democrats to throw out the baby of crypto supporters with the bathwater of anything specific about Trump and his relationship or his family's relationship to crypto. The other point that Hermione makes is that there's a connection between the underlying principles of skepticism of big centralized

authorities and the values that animate crypto. And that this is a territory that Democrats could theoretically claim. Remember, the modern political environment started in many ways as dueling reaction, to the GFC in 2008. Occupy Wall Street and the Tea Party were ultimately not actually that far off, but one side has courted that type of voter and the other hasn't. I continue to think that Richie Torres is right when he says that the real divide is not partisan but generational, but I hope that younger Democrats like Torres take a stronger and stronger voice on these issues. Obviously, ranking members walking out of hearings makes that hard, but I think that there's still room to be optimistic. In any case, that's going to do it for today's breakdown. Appreciate you listening,

as always, and until next time, be safe and take care of each other. Peace.