Is ‘Crypto Week' what crypto's inventors had in mind?
'Crypto Week' on Capitol Hill, as Republicans are calling it, was supposed to help usher in 'the golden age of digital assets' — finally creating a legal foundation for the online markets of tomorrow, a dream of the tech world and very online investors.
It hasn't been smooth, though. The marquee GENIUS Act to create a regulatory framework for stablecoins – cryptocurrencies pegged to an asset like the dollar – finally did end up passing on Thursday afternoon, but not before the crypto debate triggered enough GOP infighting to snarl the whole House's agenda for the week.
For anyone following the long arc of bitcoin, however, the bigger question isn't about the Hill logistics, but whether this has anything to do with the original goals of cryptocurrency.
Crypto was born as a revolution — a way to put value into the hands of the people who use it, rather than have it be controlled by banks, or tycoons, or (ahem) Congress. What's perhaps most ironic about Crypto Week is that the digital currency was designed so that it wouldn't need the imprimatur of politicians and regulators in the first place.
Crypto's roots lie in the 2007-8 financial crisis, which sowed a profound distrust in the institutions that were supposed to have kept the global system stable. 'This idea that you could be your own bank resonated with a lot of people,' said Oxford University's Vili Lehdonvirta, one of the first socio-economists to study cryptocurrency.
A key feature of cryptocurrencies is that they're decentralized, allowing people to exchange funds without intermediaries like banks. The now-hallowed 2008 white paper that first sketched out a blueprint for bitcoin begins by describing 'A purely peer-to-peer version of electronic cash' that would work 'without going through a financial institution.'
The paper's mysterious author, who went by the pseudonym Satoshi Nakamoto and has been subject to fervent speculation regarding his identity, was skeptical of state power as well as bank power. In emails to a mailing list around 2008, Nakamoto said that his invention was 'very attractive to the libertarian viewpoint' and warned that 'governments are good at cutting off the heads of a centrally controlled networks [sic].' Cryptocurrency would free users from government-controlled fiat currencies. 'The root problem with conventional currency is … the central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust,' wrote Nakamoto.
The current state of the cryptocurrency landscape, though, seems to be a far cry from Nakamoto's original vision. The powerful institutions he eschewed are lining up to be major players in the sector. So is the federal government: President Donald Trump — whose family runs a cryptocurrency firm — issued a March executive order establishing a Strategic Bitcoin Reserve funded by the Treasury. Bank of America and Citibank said this week that they're working on launching stablecoins.
What's more, powerful intermediary institutions have sprouted from the cryptocurrency craze. So individual users, rather than managing their own interactions with a transparent blockchain ledger, rely on major exchanges like Binance as an entry point into the market, and store their tokens with popular digital wallet services.
'Bitcoin became everything that it was trying to make obsolete,' said Lehdonvirta.
Lehdonvirta first learned about bitcoin in 2009, from an early developer who was working for his brother. (He gained some fame in the space when the New Yorker suggested he could be Nakamoto, which he denied to the New Yorker in 2011, and to DFD on Thursday.) Initially, he thought that bitcoin's design was 'extremely clever' and a 'huge innovation,' but eventually that enthusiasm waned.
'It was trying to get rid of opaque middlemen who rigged markets at the expense of the little person,' Lehdonvirta told DFD. 'Step by step, it recreated those very same structures and the institutions that it was originally intended to circumvent.'
He added that egalitarian ideals were thwarted from the early days by moneyed cryptocurrency miners, who use the power of expensive GPUs to amass more bitcoin than a small-time user could.
'This technology has been largely co-opted by all kinds of actors and certain incumbents,' said David Chaum, a cryptographer who's commonly known as the 'godfather of crypto.' He added that 'pressure from the powers that be isn't what we had envisioned.'
Yet even for idealists, some departures from the original promise of cryptocurrency might not be all that bad. 'The ideals are very much, for many people, still the same,' said Dan Elitzer, a cryptocurrency venture capitalist. In 2014, he co-led a Massachusetts Institute of Technology group that gave $100 worth of bitcoin to more than 3,000 students.
Elitzer wasn't drawn to bitcoin by a radical libertarian bent, but rather saw it as a mechanism to augment access to financial systems, especially in other countries with less stable monetary policies. 'The bet was that it was going to introduce the ability to access digital financial services to billions of people who don't have access otherwise,' he told DFD.
Although Elitzer said the 'Crypto Week' frenzy might not have been what early developers envisioned — its focus on stablecoins, for instance, ties crypto closely to the fiat currencies it was designed to replace — he argued that it would also make the U.S. dollar more widely available on a global scale. 'The majority of the world would love to have access to the ability to save and spend in dollars,' he said.
Chaum also mentioned that AI might help consumers interact more directly with cryptocurrency trading, without the need for intermediaries. He told DFD, 'One should be optimistic.'
House wants to ban TikTok ads in D.C.
The House Appropriations Committee is trying to prevent a redux of TikTok's March PR blitz in Washington, when it flooded metro stations with ads to forestall a ban.
POLITICO's Anthony Adragna reports that the committee passed an amendment to the pending appropriations bill on Thursday that would prohibit ByteDance, TikTok's Beijing-based parent company, from advertising in public transportation and airports in the D.C. area.
Rep. Steve Womack (R-Ark.), who sponsored the amendment, said at a hearing that it 'cracks down on the exploitation of advertising space by Chinese adversaries in transit systems and airports in our Capitol region.'
Congress passed a law in 2024 forcing ByteDance to either shut down TikTok's operations in the U.S. or sell the app to buyers not controlled by foreign adversaries, like China. President Donald Trump has delayed the deadline for the ban three times, and said two weeks ago that he was resuming talks with China to keep the app online.
TikTok has been fighting for its life in the meantime. Beyond bombarding the metro with ads about how important it is to the economy, it's also run a Super Bowl commercial, rented out billboards and bought an ad in POLITICO's print newspaper.
Call for more global tech cops
Lawmakers from the House Foreign Affairs Committee introduced a bill Thursday to nearly double the ranks of export control officers at the Bureau of Industry and Security, which they said would help catch diversion of advanced technologies like semiconductors.
The bipartisan bill would increase the number of the officers from 11 to 20. It was sponsored by HFAC ranking member Gregory Meeks (D-N.Y.) the chair of HFAC's subcommittee on South and Central Asia Bill Huizenga (R-Mich.), subcommittee ranking member Sydney Kamlager-Dove (D-Calif.), and Rep. Jefferson Shreve (R-Ind.).
The global semiconductor trade is a vast industry worth more than $600 billion, according to one estimate. But the bill noted that in fiscal year 2024, fewer than a dozen overseas officers conducted more than 1,400 'end-use checks' that verify whether U.S. tech is being legally used overseas.
'Without strong enforcement, our export controls are toothless,' Meeks said in a statement.
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THE FUTURE IN 5 LINKS
Stay in touch with the whole team: Aaron Mak (amak@politico.com); Mohar Chatterjee (mchatterjee@politico.com); Steve Heuser (sheuser@politico.com); Nate Robson (nrobson@politico.com); and Daniella Cheslow (dcheslow@politico.com).
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