Brian Armstrong has become a familiar face—or should we say pate—in the U.S. Capitol. The 41-year-old billionaire CEO of Coinbase, the nation’s largest cryptocurrency exchange by a country mile, has regularly traveled to Washington since at least 2018 to lobby members of Congress for friendly regulations for his industry. He was back on the Hill in June, donning a slim black suit—rather than his usual black t-shirt and black slacks—for a 48-hour bipartisan blitz. And it’s safe to say that he has never been more popular there. That’s not because senators and representatives are suddenly scooping up Bitcoins and meme coins and NFTs in some ill-advised bid to diversify their investment portfolios; just two members of Congress reportedly bought cryptocurrencies in 2022 and 2023. But politicians do see dollar signs when someone like Armstrong rolls into town because Washington is suddenly awash in crypto cash. Almost overnight, the industry has become a dominant force in American politics.The numbers boggle: A Public Citizen study last month found that crypto companies, which contributed less than $10 million to super PACs over the past two election cycles combined, have raised more than $200 million in 2024—accounting for nearly half of all corporate contributions this cycle. Most of that money has flowed into pro-crypto Fairshake, the largest corporate-backed super PAC in this election cycle (and the second-largest overall, after a pro-Trump PAC); as of Friday, Fairshake had spent $120 million on U.S. House and Senate races this year, according to an analysis by Sludge. Notably, Armstrong’s Coinbase accounts for nearly a quarter of Fairshake’s coffers, which might explain his baller smirk here: I met with more than a dozen Dem and GOP Senators in DC over the last 48 hrs to discuss creating clear rules for the crypto industry and consumer protection for crypto users. There’s strong bi-partisan momentum to get this done in the Senate now that FIT21 has passed in the… pic.twitter.com/KWVylw1kDL— Brian Armstrong (@brian_armstrong) June 12, 2024But don’t be fooled by his bipartisan platitudes; Armstrong is not just another tech CEO making the rounds in Washington, seeking a few regulatory advantages. While pitching crypto as a tool for economic opportunity to the rubes in Congress, he harbors radical ideas about crypto’s true purpose. He believes the United States is in “slow decline” and embraces the Network State, a cultish tech movement that ultimately seeks to end countries as we know them—to decentralize governance in the same way that crypto seeks to decentralize finance.“I do think crypto has implications far beyond just payments and money,” Armstrong said during a podcast interview in August, when asked about crypto’s relationship to the Network State. He said that he’s “definitely very interested” in special economic zones—in which typically cash-strapped countries cede land to tech bros who want to play a real-life version of SimCity—and other “ways that you can tokenize real estate and actual physical land to create better forms of society.” “We’re actually losing freedoms,” added Armstrong, who has an estimated net worth of $8.4 billion. “So I would like us to all in crypto think about how we actually go create physical places in the world to preserve freedom over the long term. I think that’s ultimately crypto’s destiny.”In a chat earlier this month with Balaji Srinivasan (more on him later) at the annual Network State conference in Singapore, Armstrong was even more explicit. “I also believe in exit,” Armstrong said, with “exit” meaning the process by which a person abandons existing nations for network states. “We need to start developing those backup options.” It’s hard to imagine any other American CEO openly discussing plans to undermine the U.S. government and start their own country. Even more unimaginably, politicians across the spectrum are openly embracing Armstrong and the scammy, crime-fueling, environmentally destructive industry he represents. Indeed, no matter who wins the presidential election this fall, he will have a friend in the White House.When it comes to personal investing, cryptocurrencies are casinos at best and Ponzi schemes at worst: The FBI’s latest Cryptocurrency Fraud Report estimates that crypto scammers stole $5.6 billion from Americans in 2023. The most famous crypto scammer of all time, of course, is Sam Bankman-Fried, who alone stole $8 billion from customers of his now-defunct crypto exchange, FTX. Federal authorities say he illegally poured $100 million of those funds into political campaigns before his 2022 arrest. He’s now serving a quarter-century in prison. But this only scratches the surface of the damage wrought by cryptocurrencies. Chainalysis, a blockchain analysis firm, in February tallied the illicit flow of $24.2 billion in cryptocurrency worldwide in 2023, the majority occurring in sanctioned “entities and jurisdictions.” Translation: Terrorist groups like Hezbollah and pariah nations like North Korea are big fans of crypto. Pyongyang’s crypto scammers have stolen over $3 billion since 2017. “[M]ost experts agree the North Korean government is using these stolen assets to fund its nuclear weapons programs,” Chainalysis told CNBC. Meanwhile in Russia, where crypto is banned, Vladimir Putin has embraced its limited use in an effort to evade international sanctions. The industry is also a plague on the environment. Cryptocurrencies famously burn through massive amounts of energy, thus driving up greenhouse gas emissions: A 2022 White House report warned that crypto’s use of dirty energy could “hinder the ability of the United States” to meet its Paris Agreement commitments and “to avoid the most severe impacts of climate change.” But the industry also devours water, which is used in cooling systems in crypto data centers; a study last year found that a single Bitcoin transaction can use enough water to fill a small swimming pool.Despite this parade of red flags, Congress remains hesitant to crack down—though a few Democratic senators have tried. “Crypto plays a role at every stage in the illicit fentanyl trade,” said Sen. Elizabeth Warren, Washington’s most vocal crypto critic, during a hearing in January. “The drug cartels and the traffickers sell their deadly drugs in the darkest marketplaces, and they get paid in crypto.” She’s right. And yet, fierce crypto lobbying has so far scuttled her Digital Asset Anti-Money Laundering Act, which the industry claims will stifle innovation—an argument that succeeded in getting the bill’s top Republican co-sponsor, Senator Roger Marshall of Kansas, to withdraw support.Pro-crypto legislation has fared better. In May, in a bipartisan 279-136 vote, the House passed the Financial Innovation and Technology for the 21st Century Act, which would legitimize crypto while defanging its hated nemesis, the Securities and Exchange Commission. SEC chairman Gary Gensler warned that the bill “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.” The legislation faces tougher odds—for now—in the Democratic-controlled Senate, where crypto critic Sen. Sherrod Brown of Ohio helms the Senate Banking Committee. No wonder, then, that crypto PACs have spent $40 million against Brown’s re-election bid. Whether Brown will survive the onslaught is unclear—he leads slightly in polls—but either way, Republicans are projected to win control of the chamber this fall. If they also hold the House and win the presidency, there will be no guardrails left. Crypto will have the run of the Capitol.Armstrong put it succinctly, and perhaps accurately, during a Bloomberg TV interview earlier this year: “Being anti-crypto is political suicide.”When it comes to swaying voters, that may or may not be true. Fewer than 17 percent of Americans have ever used crypto, according to polling by the Pew Research Center, and 75 percent of those who have heard of crypto don’t trust it. According to a May report from the Fed, just 7 percent of Americans hold cryptocurrencies. That said, there are undoubtedly single-issue crypto voters—though in unknown numbers.But is it suicide to oppose crypto because the industry will pour money into your opponent’s campaign? Quite possibly. That might explain why Donald Trump, who once called Bitcoin “a scam against the dollar,” changed his tune this year. “If you’re in favor of crypto,” he declared in May, “you better vote for Trump.” By July, he was promising to turn the U.S. into the “crypto capital of the planet” and suggesting that a “little crypto check” could erase the nation’s $35 trillion national debt. And in mid-September, amid a historically tight presidential race, the convicted fraudster nonetheless made time to launch his family’s new crypto business, World Liberty Financial—while remaining comically vague on the subject. “Crypto is one of those things we have to do,” wrote Trump on X. “Whether we like it or not, I have to do it.”Top Democrats sound similarly obtuse. “We all believe in the future of crypto,” said Senate Majority Leader Chuck Schumer on a recent “Crypto4Harris” fundraising call, promising swift action on crypto legislation. (Earlier that day, the Fairshake PAC had donated $3 million apiece to Elissa Slotkin and Ruben Gallego, two pro-crypto Democrats running for Senate.) In campaigning for president, Kamala Harris has broken with Joe Biden—a crypto skeptic—and called for a “reset” with the industry. In an economic policy document released by her campaign on Thursday, Harris said she would “encourage innovative technologies like AI and digital assets,” and Semafor reported the same day that Harris is “already dispatching aides to court well-heeled crypto investors and their Democratic allies in Congress.”With crypto pointing a $200 million gun at their heads, it makes sense that Democrats would seek détente. Yet it’s not clear whether they grasp the inherently extremist politics of crypto, with its seditious fantasies of sovereignty.
https://newrepublic.com/article/185738/coinbase-brian-armstrong-crypto-lobbying-washington-politicians