July 24, 2024

Elizabeth Warren’s Senate seat is coveted by crypto proponents

All of the candidates maintain that the race will be decided by issues other than crypto. Warren has focused on her long-standing platform of helping working families through progressive economic policies. A Warren spokesperson declined to comment on Warren’s opponents but said the senator “has been one of the Senate’s strongest advocates for middle class families,” noting her fights to lower costs for student debt and hearing aids, to tax corporations, and help deliver federal funds to Massachusetts.

Deaton, who moved to Massachusetts in January, calls himself a “pro-freedom” candidate standing up for everyday Americans.

In his first ad, he pledged to fight Washington corruption and take on pharmaceutical and insurance companies. Cain is a Quincy city council president who, the Globe reported, registered as a Republican this year after registering previously as a Democrat, and most recently as an unenrolled voter. He intends to focus on the Southern border and pocketbook issues like the economy, college tuition, and the cost of health care.

But the background of each candidate ensures crypto will play a role. Politico reported that top officials from the cryptocurrency industry — at companies including Ripple, Ethereum, Casa, and Gemini — all gave Deaton the maximum allowable campaign contributions.

Warren is one of the primary sponsors of the bipartisan Digital Asset Anti-Money Laundering Act. She argues that digital currencies should be subject to the same anti-money laundering laws as transactions that involve banks. Warren wants to give the US Treasury the authority it asked for to impose financial sanctions on cryptocurrency exchanges used to finance terrorism.

In hearings and statements, Warren frequently points to those entities that use cryptocurrency for nefarious purposes, like North Korea funding its missile program. In a statement she released last year, Warren said, “Crypto has become the payment method of choice for rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions of dollars in stolen funds, evade sanctions, fund illegal weapons programs, and profit off of devastating cyberattacks.”

But in a state known for its high-tech industries, Warren’s opponents say she is stifling innovation.

Cain is the founder of the Quincy-based QUBIC Labs, an incubator for blockchain technology. Blockchain is like a ledger that records transactions across a network of computers — and enables cryptocurrency exchange. Cain says the technology has broad uses beyond cryptocurrency. For example, he worked with MassTech Collaborative to explore ways governments can use blockchain, whether to streamline permitting or issue municipal bonds.

Cain said in an interview that the state needs leaders who embrace innovation. “It seems like the space is being painted in an entirely poor light given a small number of bad actors,” Cain said.

Deaton, a lawyer, played a key role in fighting what he views as government overregulation of cryptocurrency. He wrote in his 2023 memoir, “Food Stamp Warrior,” that he was drawn to cryptocurrency and invested in it because of his mother, who couldn’t afford to keep a minimum deposit in a bank and was charged exorbitant check-cashing fees. He saw cryptocurrency as potentially a low-fee currency. When the Securities and Exchange Commission sued Ripple Labs in a case alleging that the sale of a cryptocurrency — XRP — was equivalent to the sale of an unregistered security, Deaton joined the case acting as amicus, representing the interests of individuals using XRP.

The Ripple case is one of several with the potential to change how cryptocurrency is regulated. Deaton’s position won, with a judge ruling in July 2023 that XRP was not a security when sold to individual investors (although it could be when sold to institutional investors). However, a ruling by a different judge in SEC v. Terraform Labs weeks later found that cryptocurrency tokens could be classified as securities. The applicable laws will remain unsettled until it can be clarified by higher courts or Congress.

Deaton said in an interview that he sees the right to invest in cryptocurrency as “just another property right.” He said banks and ATMs are also used for illicit purposes, and the solution is to punish anyone who commits illegal activity.

Both Cain and Deaton would support some of the industry-backed bills pending in Congress that would regulate cryptocurrency in ways less stringent than Warren’s bill. Cain pointed to a bill that would set up a new framework for regulating cryptocurrency as a commodity under the Commodity Futures Trading Commission, which is widely viewed as a less aggressive regulator than the SEC.

Deaton points to bills focused on regulating stablecoins and cryptocurrency that would apply anti-money laundering provisions while codifying a dual banking system where digital assets are regulated separately from traditional financial institutions. Both suggest Warren’s bill is unworkable because it tries to impose banking rules on entities more akin to software technology than financial institutions.

Both Cain and Deaton accept contributions in crypto.

This column first appeared in The Primary Source, Globe Opinion’s free weekly newsletter about local and national politics. If you’d like to receive it in your inbox every Wednesday, sign up here.

Shira Schoenberg can be reached at shira.schoenberg@globe.com. Follow her @shiraschoenberg.

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