TWice rejected by American voters in favor of Donald Trump, the Democratic Party is now faced with his most serious identity crisis in four decades. Nowhere is the search for the relevance of the party in Trump America is no longer desperate than in its adoption of cryptocurrency, a sector whose existence depends on its ability to bypass the regulatory regulatory state that Democrats have spent a century to build. How to explain otherwise the Democratic representative Ritchie Torres – whose southern Bronx district is the poorest in the United States – to unite their forces with the Republican Tom Emmer to defend cryptocurrency through their newly formed Congressal Crypto Caucus.
Congress Republicans have always been uniform in their support for cryptocurrency: in May 2024, only three Republican members of the Chamber voted against a bill to considerably relax the regulations on digital tokens. But since 2016, the cryptocurrency industry Stable breakthroughs in the Democratic Party. This convergence, if it continues, will represent a return to the financial policy of the forefront agreement that the party spent a century to reject.
Throughout American history, the policy of money and financial risk was at the heart of the coalitions of the parties. However, since the 1896 elections, the Democrats have been the party of “hard money” deflationary and restrictive. As Historians Anton Jäger and Noam Maggor explainThe de facto merger of the populist party with the Democratic Party transformed it into a vehicle for those who saw money not as a neutral store of value, but as a political instrument which could serve the end of development – in this case, direct investment to hungry regions of the country of the country.
The defeat of William Jennings Bryan led the party to moderate its more radical monetary positions. But despite occasional inconsistencies, democrats have generally maintained the anti-deflation position established in 1896. Thirty years later, the great depression provided Franklin D Roosevelt the mandate and the crisis necessary to finish this transformation: the United States abandoned the OR stallion in 1933.
“Consumer protection” in its contemporary form has not really entered the American political lexicon in the 1960s, but this period established the contours of American financial risk. Banking Act of 1933 (often called Glass-Steagall) separated the commercial and investment bank to protect ordinary depositors against speculative excesses. The laws on the securities of 1933 and 1934 imposed dissemination requirements on the financial markets and established the Securities and Exchange Commission (SEC). The most important thing, the creation of the Federal Deposit Insurance Corporation (FDIC) ended the era of the devastating bank executed by ensuring deposits.
Collectively, these measures represented a fundamentally new relationship between citizens, banks and financial risk: the State would actively shape the financial markets rather than simply apply contracts in them.
The post-war period saw the Democratic Party further articulate this approach to “placing on the market». The 1946 employment law declared the government’s responsibility to maintain “maximum employment”, while the federal reserve, the Treasury, the SEC and the financial stability applied by interest rate ceilings, capital controls and heavy regulation of financial institutions. Although sometimes ineffective, these policies have contributed to remarkable stability. Like economists Carmen Reinhart and Kenneth Rogoff were remarkable. documentedThe period from 1945 to 1971 had practically no banking crisis in advanced economies.
The financial deregulation of the Clint administration develop The responsibilities of the FDIC.
Democrats Pro-Crypto, from torres to the disgraced mayor of New York Eric Adamsmaintains that cryptocurrency aligns with progressive principles. “Blockchain technology can release the lowest income communities of the high costs of the traditional financial system”, Torres said At a summit organized by industry last year. Kamala Harris herself invoked to cryptocurrency as an opportunity for black men. But cryptocurrency, at the base, subverts the tools for economic management that Democrats have been defending for decades.
The FDIC was created precisely because unused deposits catalyze the routine bench races; Cryptocurrency exchanges offer no comparable protection. The sovereignty of the federal reserve on the American monetary base allows it to extend the money supply during slowdowns to maintain employment; Bitcoin’s fixed offer explicitly rejects this responsibility. The SEC has been established because the non -regulated securities markets have harmed ordinary investors; The decentralization of cryptocurrency allows exchanges like Uniswap To operate outside of its protective frames.
Industry “political investments» – To borrow the terminology of the political scientist Thomas Ferguson – is a determining force undeniably in American politics. By some charges, Almost half From all the contributions of the corporate campaign in 2024, came from the cryptography sector. But despite the substantial concessions of Kamala Harris to industry, the first three crypto pacs lean By a margin of almost 2: 1. The promises of Harris to the industry have never been sufficient to win on the Trump campaign proposalTopping since the end of July, to devote the crypto as a “permanent national asset” through a “storage” of national Bitcoin.
The modest deregulation is simply not why the crypto is in the political game. This requires nothing less than seizure of the American state. And until Democrats can go beyond Trump’s documents in the sector, Crypto will remain with the Republican Party.
Volatility is the basic roadblock for the adoption of the crypto. It’s just too risky for most people. No amount of regulatory settings will change this fundamental affliction: as long as cryptocurrencies are mainly held as investments rather than Used for transactionsTheir prices will remain very sensitive to fluctuations in investor demand. And the absence of traditional stabilization mechanisms, such as central banks or reserve assets, contributes to the high volatility of cryptographic token. In simple terms: if the crypto must develop, it will be necessary both the backstop and the displacement of the traditional banking system.
Trump began to do exactly that. Its administration is recently established “Strategic bitcoin reserve“Is, in fact, a state safety net for cryptocurrency. But the conceptions of the Trump administration extend far beyond observationsseems to be the destabilization of the traditional banking system itself.
At the request of the “Department of Elon Musk’s Government” (DOGE) – itself by the name of Dogecoin, Musk’s cryptocurrency – packages and dismissals of “deferred resignation” of the Trump administration have already reduced 10%FDIC’s workforce. And Trump published a executive decree In mid-February, demanding that the former independent agency submits to the surveillance of the White House.
The Trump team has floating Replacement of already upset The FDIC with an eviscerated insurance scheme hosted in the Treasury, merging it with the office of the Currency Controller, or simply the deceased by mass dismissals and employee transfers. In both cases, control of stricter leaders on banks’ balance sheets will make the contingent of the solvency of the financial system, namely whether a private bank is favored or disadvantaged by the president. It is easy to imagine a loss of confidence that results in the traditional banking system – a result which, according to the defenders of the crypto, would work to their advantage.
If Democrats wish to surpass the Republican Party for cryptographic dollars, then they will have to offer “industry” much more than deregulation. They will have to become participants active in engineering a return to the policy of the new transaction of money and financial risk – the very positions against which the modern Democratic Party has defined itself. It would be an unprecedented capitulation even in the long history of the Democratic Party to betray the American working class.
