This post kicks off a series on the law and political economy of cryptocurrency.
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Crypto is ascendent. Donald Trump is once again in the White House, openly declaring his ambition to make America “the bitcoin superpower of the world and the crypto capital of the planet.” Pro-crypto interests poured staggering sums into the 2024 election cycle, reshaping the political terrain in both parties. Even Democrats who once positioned themselves as skeptics now hesitate to mount direct criticisms of crypto’s core economic logic or cultural significance.
Meanwhile, traditional finance has not only welcomed crypto into the fold, but is now fully enmeshed with it. BlackRock, Fidelity, and the biggest banks are not just flirting with crypto exposure, they are major stakeholders. What once looked like a disruptive outsider has been embraced as the adoptive lovechild of Wall Street and Silicon Valley.
The question, then, is not whether crypto is “here to stay.” It is, and on its own terms. The more pressing questions are: how did we get here, and where do we go now?
Unfortunately, liberals and many folks on the left have refused to take these questions seriously. The dominant stance has been reactive: to suggest that the existing legal order can contemplate and accommodate accelerating technological development, that traditional financial institutions serve the public well, and that the rise of cryptocurrency is simply a matter of grift and crime, rather than a sea change in our political economy.
From Cypherpunks to the White House
Crypto’s genealogy, it is worth remembering, dates back much further than Bitcoin. In the 1980s and ’90s, the cypherpunk movement brought together cryptographers and digital privacy activists alarmed equally by the rise of surveillance states and corporate control. Their politics were not yet completely dominated by hard-money crankery or the unrelenting greed and misanthropic nihilism of Silicon Valley VCs. Instead, they espoused the social importance of anonymity and the need to build digital financial technologies that were resilient against centralized chokepoints of power.
This ideological seedbed was fundamentally anti-authoritarian, albeit right-leaning; an ethos centered practically around radical transactional autonomy. Governments and banks were seen as threats not because of taxation or inflation per se, but primarily because they could arbitrarily restrict flows of money and information.
The global financial crisis of 2008–09 hardened crypto’s right-leaning instincts, and added a distinctly macro-populist dimension. Traditional finance had gambled recklessly, governments bailed them out, and ordinary people bore the costs. Against this backdrop, Bitcoin’s pseudonymous creator embedded a message in the genesis block: “Chancellor on brink of second bailout for banks.” The symbolism was clear – Bitcoin’s founding creed was distrust of economic stewardship by both Washington, D.C. and Wall Street. Its distinct shade of bright orange would forevermore be associated with 21st century e-libertarianism.
Since then, crypto has evolved in waves, from Bitcoin as digital gold (1.0) to Ethereum as programmable value (2.0) to the proliferation of a thousand blooming flowers altcoins (3.0). Successive iterations of altcoins, in turn, were rebranded as “utility” tokens, “non-fungible” digital certificates of authenticity (NFTs), and self-proclaimed “worthless” collectibles (memecoins). Yes, each wave brought some genuine innovation. But crypto’s explosive, secular growth ultimately owes less to cryptographic breakthroughs than to legal slipperiness and regulatory arbitrage. At every stage policymakers have been behind the trend, with new technological and terminological guises ensuring that the underlying (mostly conventional) assets and capital flows safely remained outside of the perimeter of regulatory clarity.
For example, in 2018, when regulators finally began to focus their attention on stablecoins, the most ideologically indefensible and systemically risky layer of the crypto stack, the rhetorical landscape shapeshifted yet again. Instead of acknowledging what all stablecoins shared in common – i.e., that they were shadow bank-like dollar substitutes used mostly by speculative traders to park funds in between bets – crypto advocates pivoted to emphasizing secondary differences between various functional sub-classes, such as centrally-issued (CeFi) vs decentralized (DeFi), and those with ‘fiat’ vs. ‘crypto’ vs. ‘algorithmic’ backing. The forest became obscured for the trees, and the accompanying policy debate, rather than precipitating a long-overdue conversation about the systemic risks of privately issued near-monies, merely ended up further eroding our already precarious consumer payments protection regime with a new layer of bespoke classifications and licensing arrangements. The result, predictably, was a repeat of the age-old story of privatized gains and socialized losses, with Circle’s supposedly ‘good’ stablecoin receiving over $3 billion in pass-through government bailout funding during the Silicon Valley Bank collapse to stay afloat.
Along the way, early cypherpunk dreams of censorship resistance and disintermediation have given way to the simpler seduction of “number go up.” The anti-tax, anti-inflationist free marketers have seized the crypto movement’s reins, and the remaining freedom-fighting true believers have been relegated to junior ideological partners, at best. The movement has truly become an industry, in the process fully embracing the corporate legitimacy and internal hierarchy it once shunned.
Today, crypto’s leading figures are not grungy underground hackers. They are Michael Saylor, a Wall Street veteran asset manager who remade himself into Bitcoin evangelist; Brian Armstrong, CEO of Coinbase, now a Fortune 500 firm whose largest institutional shareholders include BlackRock; and Bo Hines, Yale-educated political aspirant turned Tether executive, after a brief stint advising Trump on digital assets. Even Vitalik Buterin, famed crypto boy-genius and principled philosopher king, is facing growing criticism over his unilateral management of the Ethereum Foundation, which manages over $1 billion of ETH currency while sitting at the heart of the (increasingly centralized) Ethereum investor ecosystem.
This trajectory exposes the contradiction at the heart of modern crypto. On one hand, the Trump administration showers the industry with handouts: tax breaks, deregulatory exemptions, and favorable treatment from financial overseers. Crypto is receiving the red-carpet treatment once reserved for oil, banks, or defense contractors. On the other hand, little has changed in the deeper “state-versus-liberty” struggle that ostensibly animated its founding fathers. As Coin Center has observed, prosecutions of software developers for privacy tools like “mixers” continue unabated, with the Trump administration refusing to shield open-source developers from liability. Meanwhile, the President’s Working Group on Financial Markets has signaled indifference—if not tacit approval—for surveillance-heavy reporting requirements on peer-to-peer transactions.
This contradiction, in turn, reveals a deeper underlying reality: crypto, at its core, functions not to resist authoritarian power, but to entrench elite privilege. Was it ever thus? Who can say. Regardless, any early ambiguity surrounding crypto’s political priorities has long since been indisputably resolved. The self-proclaimed heroes have lived long enough to become (or reveal themselves as) the unscrupulous villains they once claimed to stand against.
And yet, stripped of ideological integrity, crypto continues to gain ground—politically, financially, and culturally—thanks in no small part to its enthusiastic embrace by both the captains of capital and an increasingly unashamedly corrupt Republican Party, led by its grifter-in-chief, Donald Trump.
The Left’s Missed Chances
If this story sounds bleak, that is because it is. But it was not foreordained. Crypto’s progressive opponents had many opportunities to shape the public narrative around digital finance, they simply failed to seize them.
Within the Democratic party, congressional leadership was split; one faction dazzled by industry money, the other too disorganized to mount effective resistance. At the same time, the Biden administration refused to spend the necessary political capital to articulate and whip around a common crypto-skeptic party line.
Consequently, responsibility for oppositional leadership defaulted to singular figures from the progressive-liberal wing of the Democratic Party such as Elizabeth Warren and Gary Gensler, whose dour cop-on-the-beat naysaying produced predictably lackluster results.
Specifically, Warren’s technocratic populism framed crypto as merely another front in the anti-monopoly war against Big Tech, and either denied that crypto posed anything new, dismissed it as irrelevant, or attempted to reassure the public that existing financial infrastructure was mostly adequate. In the process, she effectively threw out the technological innovation baby with the corporatist bathwater. Gensler, in turn, largely eschewed inter-agency regulatory coordination in favor of a one-trick SEC strategy of regulation-by-enforcement. The optics were bad: “Sheriff Gary” playing Yosemite Sam, firing wildly into the air, sometimes into his own foot. The substance was even worse. Securities law, the weakest, most capital-friendly of the financial regulatory regimes (except perhaps derivatives law under the crypto-captured CFTC), was never realistically going to tame the ascendent trillion-dollar industry on its own, and it was foolish to try.
The deeper failure, though, was one of vision. At its most ambitious, crypto claims to be the future of money. And money, historically, has always been the tip of the spear of broader economic and cultural transformation. From clay tablets in Mesopotamia to double-entry bookkeeping in Renaissance Europe, financial technologies have tended to prefigure larger social shifts.
Yet the populist Left, historically the faction of the progressive wing best at articulating big, bold, inspirational policy visions, never seriously offered a credible alternative vision for the future of democratic finance. Instead, leftist political leaders–wary of alienating young, online constituencies, at least partially seduced by crypto’s (long hollowed out) anti-authoritarian aesthetics, and generally ambivalent toward if not outright afraid of technology at the best of times–gave the ‘Crypto Question’ little if any sustained attention, and largely sat out of the fight.
Progressives’ failure to meaningfully grapple with crypto’s cultural appeal was a clear strategic mistake. The U.S. payment system is fragmented and slow. People distrust both banks and government bureaucracies to safeguard their money without self-interest. Yet Democratic leadership defaulted to their tendency to seek bipartisanship and intra-party consensus, diluting legislation until it satisfied no one. In practice, this shepherded skeptics toward pro-industry positions while shredding their own credibility—an echo of the Obamacare compromises of the Obama era. Progressives, meanwhile, ceded the stage to regulators and Fed officials, projecting professional expertise rather than democratic imagination. Indeed, the only proactive rollout of large-scale public payments infrastructure during the Biden era—FedNow, which went live in 2023—was narrowly focused, overly delayed, and politically uninspiring.
Instead, forward-looking proposals for genuinely transformative public financial infrastructure, like public and postal banking, largely fell out of progressive discourse, while the inspiring concept of a new “Digital Dollar” was reframed into “Central Bank Digital Currency,” a technocratic category that immediately drained popular energy and gifted the Right a rhetorical cudgel. Ron DeSantis made opposition to CBDCs a populist rallying cry. Tom Emmer shepherded anti-CBDC legislation through Congress. Democrats, by contrast, sounded like bureaucrats defending status quo mediocrity and/or the lame pet projects of egghead central bankers.
A Progressive Counter-vision
Where to go from here? A progressive counter-vision must rest on three planks.
First, progressives should champion digital public money that is both privacy-preserving and not reliant on for-profit intermediaries. The core visual meme/metaphor for this system is not bank accounts at the Fed, as important as they may be, but rather digital coins issued by the Mint—simple, anonymous, with transactional data stored offline on locally controlled hardware, instead of a big centralized database in the Cloud. Real public money in your pocket, under your control, like it once used to be. By framing the fight as cash versus surveillance, Progressives can reclaim both liberty and integrity from the Right.
Second, Progressives must focus broadly on regulating shadow money—private, fixed-value dollar liabilities used as fiat currency substitutes—of which Stablecoins are merely the latest face. The real project is to finish the work left undone after 1929 and 2008 by consolidating all forms of near-money under a comprehensive shadow banking regulatory framework. While stablecoins will naturally fall within this framework, the goal is not to target crypto per se, but rather to combat privatized gains and socialized losses that are associated with every form of “free market” financial instrument that attempts to walk and talk as if it’s equivalent to regular public money, only to inevitably require government backstops and bailouts in moments of systemic crisis or operational systems failure.
Finally, the goal should be to target speculative, extractive finance, not private currencies. Communities have always experimented with alternative currencies, from local scrips to mutual credit systems. Digital tools can enhance these efforts. The real danger lies in exotic derivatives and opaque speculative instruments. Regulators should focus on grift, not grassroots experimentation. Importantly, this shift helps reframe the debate away from “decentralization” to class politics: ordinary people use money as money; elites use complex instruments to extract wealth. The enemy is not developers or hobbyists tinkering with apps. It is oligarchs like Andreessen and Thiel, who understand that control of the future of money means control of the future itself.
Crypto may be ascendent. But the history of this era remains unwritten. With vision, courage, and clarity of purpose, the Left can win the battle for the soul of public money and reclaim a better future for all.
