GOP crypto maxis almost as bad as Dems’ ‘anti-crypto army’ – Cointelegraph Magazine

After nearly a decade of gridlock, the United States may finally be on the cusp of crafting a cohesive policy framework for digital assets. In Congress, lawmakers are mulling a variety of proposed bills governing everything from stablecoins and securities rules to sanctions. The 2024 presidential race, meanwhile, may be the first to see crypto as a focal point.  

While both sides of the aisle are playing valuable roles, Republicans — especially influential congresspeople like Tom Emmer and Patrick McHenry — have emerged as the industry’s most important allies. However, the GOP’s pro-crypto bias may also be its downfall. From uncritical crypto “maximalism” to Orwellian surveillance paranoia, Web3’s industry bromides have crept into the party’s campaign rhetoric and, worse, its policy proposals. In seminal upcoming legislative opportunities, such as the House’s draft crypto regulatory bill, Republican policymakers must focus on putting “America first.”

Memeified campaign rhetoric

During his presidential campaign announcement in May, Florida Governor Ron DeSantis insisted that “the current regime, clearly, has it out for Bitcoin.” The candidate’s populist red meat has been the Republican “party line” on crypto in this election cycle. So far, it has been difficult to differentiate the rhetoric of GOP presidential hopefuls from that of “freedom-maximalist” influencers on Crypto Twitter.

For candidates like DeSantis, protecting Americans from “a federally controlled central bank digital currency surveillance state” ranks high among blockchain’s potential use cases. Even GOP longshot Vivek Ramaswamy, a biotech entrepreneur who claims to “understand this stuff in a much more deep and rich way” than DeSantis, says he views Bitcoin as a “decentralized alternative” to the U.S. dollar and wants to “make the 2024 election a referendum on fiat currency.”

@GOPMajorityWhip Tom Emmer joined me in this critical fight to protect our markets: “American investors and industry deserve clear and consistent oversight, not political gamesmanship. The SEC Stabilization Act will make common-sense changes to ensure that the SEC’s priorities…

— Warren Davidson 🇺🇸 (@WarrenDavidson) June 12, 2023

Meanwhile, at the other extreme, progressive Senator Elizabeth Warren and her “anti-crypto army” depict crypto as an omnipresent threat, simultaneously eroding investor protections, abetting money launderers and worsening America’s “tax gap.” What is lacking in this partisan hothouse is any informed appreciation of blockchain’s potential or its importance to America’s long-term economic interests.

Misguided policymaking

Among the rare exceptions are crypto-savvy GOP lawmakers such as Financial Services Committee Chair McHenry, who spearheaded the House Subcommittee on Digital Assets earlier this year. However, the influence of the crypto industry’s memeified rhetoric is evident even in the party’s innermost policy-making circles.  

Take, for example, the Digital Assets Market Structure (DAMS) bill. The watershed draft legislation, penned in part by McHenry’s committee, marks Congress’s most credible proposed regulatory framework for crypto to date. While, as Messari CEO Ryan Selkis said, DAMS is “a 10x improvement” over past bills, it still falls short of bringing regulatory clarity to the industry.

Unfortunately, the proposed bill does more to regulate Web3 as crypto natives imagine it to be than as the industry operates today. In keeping with Republicans’ long-standing preference, DAMS conceives of crypto assets primarily as “digital commodities” to be overseen by the Commodities Futures Trading Commission. Indeed, the bill paves a clear path for CFTC compliance.

There’s one catch: To qualify as a “digital commodity,” according to DAMS, “each network to which the digital asset relates [must be] certified to be […] decentralized,” which requires that no single person has the “unilateral authority, directly or indirectly, […] to materially alter” the protocol or to “prohibit any person [from] deploying software that uses or integrates with the blockchain network.”

In other words, much of the more than 160-page draft bill only applies, with any certainty, to two digital assets: Bitcoin and Ether. Meanwhile, protocols with any level of centralized operations (read: most)…