Written by Arthur Hayes, Founder of BitMEX
Compiled by: 0xjs, Golden Finance
Last summer I traveled to the (House music) doosh doosh mecca of Ibiza, Spain. It was a professional mission for me and three friends. The organizer of the trip was a guy I went to college with who lived in London after graduation. He lived for European summers and organized a really great trip.
On our first night, a classmate sent us an invitation to a private party at a villa on the island. Imagine Chiltern guests being transported to the Balearic Islands. Two friends lived in London and knew the people at the party; my former Hong Kong roommate and I knew no one. The two of us walked to the bar and started drinking.
A few hours later we were in the hot, cramped room where Carlita was spinning the stove. As we danced to the music, Leonardo Dicaprio was ushered in by a long-legged girl. We witnessed something very hilarious. Leonardo's chick was pitching him on why he should take her home. We overheard snippets of the conversation and it was very entertaining. I don't know if she succeeded in sleeping with a movie star, but she certainly tried her best.
The story is relevant to cryptocurrencies because a potential American emperor, Donald Trump, suddenly cares about cryptocurrencies. A few thousand voters will decide the outcome of the US presidential election in key swing states such as Michigan, Pennsylvania, and Florida. Courting the young, politically active, and upstart crypto crowd could win Trump the election. So Trump is boosting the reputation of his crypto supporters by saying all the right things. One example is his announcement that he will pardon Ross Ulbricht, the former head of the Silk Road trading platform. Ross is currently serving a life sentence for running an online marketplace that used Bitcoin as the primary payment method.
Unfortunately, this newfound political attention has caught the attention of many in our industry. The political hotties are trying to bring us home, not the other way around. These feelings are misplaced. The playboys of crypto are not movie stars, but fools standing on the fringe of the party.
I am dismayed that many crypto experts who should know better are now blindly hosting gimmicky fundraisers for the Trump campaign. They mistakenly believe that Trump is sincere and that if they just donate enough money, the crypto chokehold will go away. This is pure bullshit. Trump is a savvy politician. He will say anything to anyone who wants to be re-elected. Once in office, anything to do with crypto will be a distant memory.
How can pro-cryptocurrency voters in the U.S. capitalize on the need for swing votes in both the Democratic and Republican parties? Is there a way to turn the roughly 50 million U.S. adults who hold cryptocurrencies into a single voting bloc? Is there a strategy that doesn’t require any campaign contributions but ensures that positive cryptocurrency legislation is enacted before the election? Of course there is. But it won’t be easy.
Before I present my strategic thinking, I would like the reader to analyze a prophetic speech by Malcolm X. I will use this speech as a foil to illustrate how oppressed American crypto holders/voters can achieve their goals in a divisive political environment.
After listening to Brother Malcolm, I wanted to discuss a simple piece of legislation that crypto voters should demand their elected political representatives enact into law before Election Day. It’s frustrating that crypto celebrities go out of their way to support pro-crypto politicians who do little more than build regulatory moats around Coinbase and Blackrock. If voters are to be pro-crypto voters, legislation enacted in their names should actually benefit the industry as a whole and bring crypto jobs and opportunities to Pax Americana. Corporate fraud should not be on the menu.
Finally, I’ll dig into the numbers and show how a single pro-crypto voter could mathematically determine which party controls the House, the Senate, and most importantly, the presidency.
Before I get into that, I want to explain why “separation of government from money” should be a top issue for any voter, no matter who is elected. When a state and its governing bodies have to tax citizens on a regular basis, they will be very careful about what they ask for, lest they be voted out of office. Many of the state’s problems stem from overactive governments using inflationary taxes to do unnecessary things. For example, current levels of global military spending cannot be sustained if governments use direct taxes to pay for the military, which is bound to lead to conflict. What do you want: free healthcare or more AK-47s? Free college education or a fleet of F-16s? Affordable public transportation or another submarine with nuclear missiles? If taxpayers decide, different types of public goods are produced, improving the quality of life for many people.
I will refer to "Joe Biden" as the presumptive Democratic nominee. However, after his poor debate performance, I do not think he will ultimately be the Democratic nominee for president. He is Joe Biden, but rather than speculate on who will replace him, I prefer to assume he is the nominee for simplicity.
Ballot or Bullet
Travel back with me to 1960s America. The Negroes were getting restless and demanding political change. Malcolm X was one such radical leader pushing for change in the status quo. On April 3, 1964, he gave a speech in Cleveland, Ohio titled “The Ballot or the Bullet.” The theme was how the black community could use their power as a voting bloc to decide who would be the next president and what they should get in return for their loyalty. Incumbent President Lyndon Johnson (Democrat) was running against Barry Goldwater (Republican). Johnson won reelection.
I will excerpt a few passages that are relevant to this discussion. To be clear, I do not agree with everything Malcolm X said or did. Nonetheless, his observations are sharp and relevant to minority groups and cryptocurrency holders who seek political benefits under a majority rule system and who suffer from political oppression.
Malcolm begins by explaining why black people should put aside their differences and unite to achieve political goals that benefit everyone:
“Even though I remain a Muslim, I am not here tonight to discuss my religion. I am not here to try to convert you to your religion. I am not here to argue or discuss anything that we disagree on, because it is time for us to iron out our differences and realize that we better first see that we have the same problem, a common problem, a problem that will get you into hell, whether you are a Baptist, a Methodist, a Muslim, or a nationalist. Whether you are educated or illiterate, whether you live on a boulevard or an alley, you will get into hell just like I did. We are all in the same boat, and we are all going to get into the same hell that was created by the same man. He happens to be white. All of us have suffered from white political oppression, white economic exploitation, and white social degradation in this country.”
In crypto, it doesn’t matter if you’re a Bitcoin, Ethereum, Solana, etc. maximalist. Most importantly, it doesn’t matter if you’re a centralized exchange shareholder like Coinbase or a regular holder. “Politicians,” or in this case, the state, have a grudge against any of Satoshi’s disciples.
What are the similarities between the 1964 and 2024 elections?
“Nineteen sixty-four may go down as the most explosive year in American history. The most explosive year. Why? Because it was also the year of politics. The year in which all the white politicians went back to the so-called black communities to defraud some of your votes and mine. The year in which all the white political con men went back to your communities and mine to dash our hopes with their false promises, with their subterfuge and betrayal, with false promises that they did not intend to keep.”
2024 is an important election year for Pax Americana. Pax Americana is at a crossroads. Should it accept a multipolar world order, stay the course, and fight challengers economically and militarily? The next emperor will have a big say in how America navigates this changing world order. Trump and the Republicans are saying nice things about crypto, given that a few thousand votes will decide the outcome of an election in a handful of states. I, like Malcolm in 1964, doubt Trump’s sincerity. He cares about getting elected, and he’ll do whatever it takes to get your vote. If Biden and the Democrats are for crypto, Trump is against it. It’s just good politics.
Malcolm then discusses why and how disenfranchised minorities can wield enormous political power.
“These 22 million victims are waking up. Their eyes are starting to open. They are starting to see things that they only paid attention to in the past. They are maturing politically. They are realizing that there are new political trends from coast to coast. When they see these new political trends, they may find that every election is so closely contested that they have to recount the votes. They had to recount the votes in Massachusetts to determine who would be governor because the vote was so close. The same thing happened in Rhode Island, Minnesota, and many other places in the country. The same thing happened when Kennedy and Nixon ran for president. The vote was so close that they had to recount the votes. So, what does this mean? It means that when the white race is close and the black people have their own voting bloc, they are the ones who decide who will be in the White House and who will be in the cold [or in jail if you are Trump or a Trump supporter].”
According to Coinbase, 50 million Americans (20% of the population) own cryptocurrencies. If this group of people voted together, they could easily decide which clown sits on the throne. The split between the Democratic and Republican parties in the United States presents a unique opportunity to gain major political concessions. It is important to realize that prioritizing party affiliation over Satoshi Nakamoto is a recipe for failure.
Malcolm went on to castigate tokenism. We should heed this warning. American cryptocurrency holders should not settle for some meaningless government stance from either the Biden or Trump administration. The only thing that is acceptable is pro-crypto legislation signed into law.
"They got all the black votes, and when they got the votes, the black people got nothing. All they did when they came to Washington was give some big black people good jobs. Those big black people didn't need good jobs, they already had jobs. It's a disguise, it's a trick, it's a betrayal, it's a whitewash."
I strongly urge readers to read the entire speech carefully. Just keep in mind the racial, economic, and political context in which Malcolm X spoke. I use his black-versus-white speech as a foil to illustrate my point: if tens of millions of cryptocurrency holders in the United States wanted to, they could wrest favorable policies from the government because politicians are eager to get re-elected.
For those who think that immediate substantive progress will take too long or be too difficult, remember that American politicians are currently engaging in moral maneuvers to continue funding Israel’s war with Hamas. Bombardier Bibi “The Bedouin Butcher” Netanyahu is carrying out a genocidal campaign against defenseless Palestinian civilians, a campaign that the entire world is witnessing in real time, as he wishes to exterminate the ideology of Hamas and its thousands of fighters, who are sworn enemies of the Israeli state. Regardless of their personal views, no American politician is willing to stand up for human lives, as it would mean angering the powerful Israel lobby, which, due to their overwhelming financial resources, can run negative ad after negative ad, reducing the politician’s chances of reelection. The primary goal of any politician is to be re-elected, and this drive for self-preservation is even stronger in the capital of the empire, as long-term service as a congressman or senator brings with it huge wealth.
Take House Representative Nancy Pelosi, for example. Here’s what I learned using ChatGPT, a tool that provides access to official public disclosures of her net worth. In 1987, when she joined Congress, Pelosi disclosed an estimated net worth of $3.64 million. By 2023, her disclosed net worth estimate capped at $97.7 million, a nearly 27-fold increase. ChatGPT estimates that she earned $5.7 million in salary as a congresswoman during her 37-year tenure. Much of her wealth comes from her savvy investments in the stock and real estate markets. Given that elected members of the House and Senate are allowed to engage in insider trading, it’s no wonder she’s a better trader than Steve Cohen.
Pelosi is the living embodiment of the political dream of America's ruling class. As a public servant, she has accumulated a wealth that has been passed down from generation to generation. Is it any wonder that politicians will say anything to please you in order to stay in power?
Malcolm X once suggested that cryptocurrency holders have power as a political minority in a divisive electoral environment, so what should we protest about?
What is currency?
Money can be dirty fiat, heavy gold, or shiny Bitcoin, but what is it? The purpose of money is to transfer energy across time and space through physical or digital forms of communication. Lynn Alden's Ledger Theory of Money is a good way to think about what money is.
Understanding blockchain from a fundamental perspective can make the concept come alive. A blockchain is simply a series of messages that are cryptographically hashed and linked together in sequence, placed in a publicly readable ledger. With Bitcoin, we can read and write to this public ledger. Bitcoin is digital speech.
Here’s another example of a concept that many readers have taken a little too literally. TikTok, Instagram, Facebook, etc. are all services that allow you to read and write to a centralized database containing your and other users’ messages. These messages take the form of video or text content. These platforms enable digital speech.
In most liberal democratic societies, governments consider information posted and consumed on social media platforms to be protected speech. Therefore, it is also a reality that users are free to express their opinions without government interference. Furthermore, the companies that provide these services are not responsible for the speech on their platforms.
Let’s take Facebook during the 2016 US presidential election. The Democratic team claimed that the evil Russian dictator Vladimir Putin had frustrated “democracy” by using Facebook to influence people to vote for Donald Trump, who they saw as a petty tyrant. It followed that Facebook had condoned treason and that its CEO should be held criminally responsible for the actions of a foreign country on its platform. However, this did not happen; thanks to free speech laws, Facebook and its executives escaped any punishment.
If the internet and the information it contains is protected speech, then why should Bitcoin and any other blockchain-backed cryptocurrency or token be treated differently? Both use speech to provide services. The fact that Bitcoin is a monetary instrument does not make it lose its constitutional protection against government interference.
This is a reading of a document written more than two centuries ago, when steam engines were a new technology. Yet in the United States, the Constitution is parsed this way. The Second Amendment says you have the right to bear arms. In the 18th century, the most advanced weapon was a flintlock. In modern times, the gun lobby and many Supreme Court decisions in the United States have interpreted this to mean you have the right to carry an automatic assault rifle. Absurdity is the name of the game in the land of the free.
Let me make a simple statement that it should realign encryption policy to comply with free speech:
“Cryptocurrencies and tokens that reside on or are powered by a blockchain are forms of protected speech. All applicable laws protecting free speech apply to cryptocurrency users or intermediaries. Any laws or regulations restricting the ability of a person or formally established entity to hold or transfer cryptocurrency do not apply.”
That’s all we need to fully clarify the current state of cryptocurrency regulation. Let’s dive into what the practical implications would be if such a law were passed.
Encryption clarity
If this simple bill is enacted into law, it will have a profound impact on how various regulatory agencies treat cryptocurrencies. Questions will abound as to which agency has jurisdiction over cryptocurrency-related conduct. The only way the lines will be drawn is through legal precedent achieved through adversarial, public court cases. That is the way it should be. Judges appointed to adjudicate laws enacted by elected representatives will determine the extent of free speech enjoyed by cryptocurrencies.
But in the meantime, Pax Americana will be the most favorable place to do crypto. Doing crypto could mean opening your own exchange, creating a new DeFi protocol, building decentralized infrastructure, or pooling money for investing or trading. It means permissionless innovation. The diehards under Pax Americana are nostalgic for this innovation. Did John D. Rockefeller, Andrew Carnegie, or Henry Ford ever beg government officials to completely overhaul the oil, steel, or auto industries? Of course not, they just got things done, building entire industries and industrial processes that put agrarian America on the path to becoming an empire.
For the politicians who voted to make this happen, it means they get to take credit for creating good-paying jobs. It means using their privileged position on the subcommittee to buy up shares in publicly traded cryptocurrency exchanges and miners, thereby lining their pockets like Congresswoman Pelosi did. If they want to engage in insider trading, at least they can do it while the cryptocurrency business is booming.
This sounds like happy days for cryptocurrency holders and politicians. Is anyone upset by these developments?
The Opposition — Traditional Finance Is Bad
TradFi would be upset if crypto was considered protected speech, but fiat currency was not. Their lobbyists would vehemently oppose any such crypto free speech legislation. So I invite them to join us on this journey.
Financial regulatory rules that have been in place for decades do not protect consumers, they simply provide political immunity for bureaucrats to continue to bail out the financial sector in various ways. After every crisis, politicians need to show they are doing something and impose more ridiculous rules and regulations on traditional financial institutions.
Fiat money (like the dollar bill) and commodity money (like gold) should also be considered speech and therefore protected. As mentioned before, these are all forms of money that communicate who owns how much energy in time and space. There should be an equal, level playing field between all forms of money.
Let's modify the proposed bill slightly:
“Any form of money, such as government-issued currency, precious metals such as gold and silver, and cryptocurrencies and tokens that reside on or are powered by a blockchain, are protected forms of speech. All applicable laws protecting free speech apply to cryptocurrency users or intermediaries. Any laws or regulations restricting the ability of a person or formally established entity to hold or transfer cryptocurrency do not apply.”
There is a catch. Since most financial regulators will be defunct, fractional reserve banking and other highly leveraged traditional financial intermediaries may engage in highly risky activities. All financial government bailout programs should be eliminated to alleviate the costs to the public.
Let's amend the bill again:
“Any form of money, such as government-issued currency, precious metals such as gold and silver, and cryptocurrencies and tokens that reside on or are powered by a blockchain, are protected forms of speech. All applicable laws protecting free speech apply to cryptocurrency users or intermediaries. Any laws or regulations that restrict the ability of a person or legally constituted entity to hold or transfer cryptocurrency do not apply.
No financial institution may be bailed out with public funds in any way, shape or form. No public financial institution (comprehensive list of all relevant entities) may receive any assistance from the federal government.”
The government should not guarantee any amount of bank deposits. Instead, it should require banks to put fiat currencies on a public blockchain to enable triple-entry accounting. If all fiat currencies circulate on a public cryptographic ledger, potential depositors can verify the health of any financial institution in real time.
The central bank and any other public financial institutions, such as the housing mortgage policy banks (e.g., Fannie Mae, Ginnie Mae, and Freddie Mac), are not allowed to receive any funds from the central government if they go bankrupt. The central bank can print all the money it wants, but if its losses deplete all equity capital, the central bank goes bankrupt. This will erode public trust in fiat currency, but the goal is to ensure that all financial institutions, both public and private, are on board and cannot use public funds in case of trouble.
The Opposition — Crypto Crony Capitalism
Another voice of opposition comes from within. Many American companies and individuals with large private crypto business interests hope to use this opportunity to promote legislation to build regulatory moats for their businesses. If these Uncle Toms are found to be involved in such transactions, their customers should publicly discredit them. No one should support any crypto business that uses the political process to benefit itself at the expense of collective financial freedom.
Are there any rules?
Of course there is. If you steal or commit fraud, you are breaking the law. If you post false statements on the internet with the intent to deceive others for personal gain, you will be punished. The same is true for cryptocurrency. The industry does not need any new laws to punish behavior that is already illegal.
mission accomplished
The best time to get concrete results is before the November election. The bill I am proposing is only 113 words. It is short for a reason. It is easy to understand; anyone can read it in a few minutes. This means that every elected representative can digest the contents of the bill immediately, and it is less likely to be hijacked by acolytes who serve as a conduit for highly paid lobbyists.
The bill needs supporters in Congress and the Senate to bring it to their respective chambers for discussion and, ultimately, a vote. The crypto lobby can select a few politicians in each chamber who are hotly contesting reelection campaigns. The message is: sponsor this bill, and the crypto voters in your district will support you.
Once the bill is in place, it’s time to pressure Democrats and Republicans to support it. The same carrot-and-stick approach applies: support the bill and the crypto voters in your district will vote for you; if you don’t, they’ll vote for your opponent.
Finally, assuming the bill passes the House and Senate, Biden must sign the bill into law. American voters do not have to be confined to a particular party to vote for congressmen, senators, and presidents. Therefore, voters can vote for a Republican congressman or senator in their district who supports the bill, and they can also vote for Biden as president, even though Biden is a Democrat.
This is more effective than hoping Trump keeps his promises on various pro-crypto policy proposals, since this bill could become law in a matter of weeks. Look at how fast lawmakers moved when they approved more weapons for Ukraine and Israel. When they are motivated by self-interest (i.e., their defense industry stock portfolios), things happen at superluminal speeds.
After the election, voters who support cryptocurrency will lose all leverage. The next election will be in two years, mostly involving members of Congress who serve two-year terms. Biden or Trump will not spend the same political capital supporting cryptocurrency policy because it will not directly affect their reelection chances or the majority of elected officials within their respective parties.
Keep in mind that the drumbeat of war will intensify after the election. The only reason Iran and Russia haven’t been the targets of more direct attacks by the US and NATO is that Biden doesn’t want oil prices to rise before Election Day. Trump assassinated Qassem Soleimani, a leading general in Iran’s Revolutionary Guards, during his first term. He would not hesitate to bomb Iran at Israel’s request. All of this suggests that once the bombs start flying, the question of cryptocurrency freedom will be quickly forgotten.
Electoral Math
It’s nice to dream, but is it possible to become a reality? Using ChatGPT, I created a model to analyze the ability of a single bloc of crypto voters to decide congressional, senate, and presidential elections.
Assumptions:
1. The biggest assumption is that every one of the 50 million adults who hold cryptocurrency is registered to vote and is a single bloc of voters who support cryptocurrency.
2. Among voters who hold cryptocurrency, the split between Democrats and Republicans is 50/50.
3. The voter turnout in 2024 was 69.40%, the same as the voter turnout in 2020. I used 2020 because that was the last presidential election year.
4. Since Coinbase does not provide detailed data on the number of cryptocurrency holders in each state, I will allocate voters by state based on the number of registered voters in the 2020 presidential election.
5. Finally, I assume that voters voted along party lines in previous elections. This means that I only care about voters who cross party lines in the 2024 election. For example, if Democrats beat Republicans in a congressional race by 1,000 votes in 2022, then in order to flip the election in 2024, I only care about registered crypto-holding Democrats voting for Republicans.
Strategy
The Democrats control the presidency and the Senate. They are clearly trying to do whatever is necessary to maintain control of the presidency, which gives them enormous control over every branch of the U.S. government. The message to the party leadership is simple: enact this pro-crypto legislation, or the pro-crypto lobby will give the Republicans control of all three branches of government. If the Democrats play along, the pro-crypto lobby can hand all three branches of government to the Democrats.
Since Democrats do not control the House, some of the Republican lawmakers at risk (four to be exact) must be threatened with expulsion if they do not cross party lines to vote for the bill.
Does this make sense mathematically? Yes, let's look at the numbers.
Congressional race
ChatGPT provided me with the results of the 2022 Congressional Election. I counted the number of votes received by the winner and runner-up in each constituency, as well as their respective political parties.
The Republicans hold 48 seats, which could be lost to the Democrats if every Republican cryptocurrency holder in those races crossed party lines. This would swing the House of Representatives to the Democrats.
Senate race
Compared to the House of Representatives, Senators serve six-year terms. Therefore, I asked ChatGPT to provide the results of the 2018 Senate elections. Those elected in 2018 must run for re-election this year.
The Republicans hold nine seats that could be taken by the Democrats if every Republican cryptocurrency holder in these races crossed party lines. This would expand the Democrats’ current majority in the Senate.
Presidential campaign
ChatGPT provided me with state-by-state election results for 2020. Each state has a certain number of electoral votes, and a presidential candidate needs 270 electoral votes to win.
If every Republican cryptocurrency holder in a handful of states crossed party lines, 115 electoral votes would go to the Democratic candidate. That would guarantee Biden a win.
If you are interested in my models and supporting data, please contact me; I will be happy to provide them.
hard work
The hard work is not raising money from wealthy American crypto holders. Not a penny should be donated to political campaigns. The hard work is convincing the vast majority of crypto holders to become a single bloc of voters and go to the polls. That’s what the millions of dollars raised by various pro-crypto lobbying groups should be spent on.
If Brian Armstrong really wants to be an advocate for pro-crypto legislation, as many of the touting articles about his political activities describe, then he should collect digital signatures from Coinbase US users in support of the proposed legislation. That way, politicians know that cryptocurrency holders are serious about pushing for change in an organized way.
What I’m describing is not easy, and more importantly, it’s not about the amount of campaign contributions. It’s about incentivizing crypto holders to hold their elected representatives accountable to effecting meaningful change. Doing this hard thing means that any politician who wants to get into a lucrative job in Washington, DC can’t cross over to crypto, because they know crypto holders will go out and vote with their wallets.
Independents
Some readers may think this article is a veiled attempt to poison the minds of pro-crypto Trump supporters. I am not a member of any political party and do not care who wins the U.S. presidential election. The ruling party has the means and incentives to stay in power at all costs. This is especially true if the ruling party does something questionable to prevent the opposition from taking power. This is why it is more effective to work with the Democrats. If the opposite were the case, I would advocate for supporting the Republicans. The point is that in a highly polarized two-party system, partisanship is detrimental to achieving your single-group policy goals.
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If crypto voters in the U.S. can pass a simple yet profound piece of pro-crypto legislation, it will be highly publicized. As a result, it will politically activate crypto holders in other jurisdictions where small, vocal, and dedicated minority voting blocs can achieve legislative outcomes.
Look at how quickly the Hong Kong and London stock exchanges launched or planned to launch Bitcoin spot ETFs after the U.S. did. Nation-state competition is our friend. Suppose there were serious efforts to use this unique moment in history to push the U.S. to pass a transformative, simple, and effective pro-crypto legislation. In that case, non-Americans should contribute to the cause.
Helping the cause means shaming the individuals and companies that propose legislation rife with crypto crony capitalism. Helping the cause means analyzing and providing feedback on serious proposals. Helping the cause means demanding that those who claim to support crypto in U.S. politics not accept empty platitudes from politicians seeking reelection, but instead demand concrete action immediately before the vote. Finally, if your country is a representative democracy with highly polarized political parties and no single party holding an overwhelming majority, helping the cause means organizing similar campaigns in your country.
Ideas are important
Over a year ago, I wrote an article about creating a synthetic dollar using long Bitcoin and short perpetual swap contracts. Ethena used this article as inspiration, added their own spin on the idea, and built the fastest growing stablecoin ever. They worked hard, and it wasn’t easy. They’ve been so successful that my inbox is full of emails from founders pitching the next “Ethena killer.”
I don’t think the ideas raised in this article are truly original. However, I hope that by putting this article forward, many in the industry will read it and prompt motivated and savvy politicians to take action now. Do not waste this opportunity. Because if they do, the hot chicks at the party will go visit another man. And come November 6, the loyal politicians will once again be stuck in the lurch, watching the world pass them by.
