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Can crypto shape the Senate? Breaking down Warren and Deaton’s heated debate

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How did the debate between Warren and Deaton expose deeper tensions within U.S. financial regulation, and could their opposing views on crypto play a role in shaping the Senate’s future?

The classic face-off

The first face-off between Democratic Senator Elizabeth Warren and her Republican challenger, attorney John Deaton, on Oct. 15 night was anything but polite. 

Co-sponsored by WBZ-TV and The Boston Globe, the hour-long debate was a rollercoaster of policy clashes and personal digs, with the topic of cryptocurrency taking center stage at one point.

Senator Warren, known for her firm stance on regulating the crypto industry, wasted no time in accusing Deaton of being too cozy with crypto players. 

On the other hand, Deaton, a prominent lawyer with a history of defending crypto investors, painted himself as a champion for financial innovation. 

Warren, a long-time advocate for consumer protection, has often criticized the crypto world, labeling it as a ‘haven for fraud and scams.’ Her push for tougher regulations has earned her both supporters and critics. 

Deaton, on the other hand, has built a reputation for defending the rights of individual investors and smaller players in the crypto space, notably in cases against the SEC. His stance reflects a more pro-crypto, less regulatory-heavy approach.

Let’s uncover the key moments from this fiery discussion and what it tells us about the future of crypto regulation in the U.S. Senate race.

Crypto clash in Senate debate

The first Senate debate between Elizabeth Warren and John Deaton was supposed to be about multiple issues. But in true political drama, the topic that stole the show was crypto.

Warren, known for her strong advocacy of tighter crypto regulation, wasted no time accusing Deaton of being overly aligned with the crypto industry.

She cited campaign finance numbers, stating, “90% of his [Deaton’s] campaign funding comes from the crypto industry.” She added, “If John Deaton goes to Washington, his crypto buddies will expect a return on their investment,” framing him as a candidate more interested in defending crypto interests than addressing the needs of regular citizens.

Deaton responded by questioning the Senator’s focus on crypto:

“I wish Senator Warren would attack inflation the way she attacks crypto. I wish she would attack securing the border the way she’s focused on crypto.”

Deaton also defended his pro-crypto stance by sharing a personal story about his mother, who had been impacted by high banking fees.

“When Bitcoin (BTC) came along, I thought of my mom, who couldn’t maintain a bank account due to fees. Bitcoin offered a way to cut out the predatory banks and middlemen,” he explained, positioning himself as a candidate who sees crypto as part of the solution for financial access, particularly for marginalized communities.

Warren, in response, doubled down on her familiar narrative that crypto facilitates illegal activities, such as money laundering and terrorism financing. She argued that crypto should be subject to the same regulations as other financial institutions.

“I just want crypto to follow the same rules as every bank, stockbroker, and credit union,” Warren asserted, framing her stance as a matter of financial safety and regulatory fairness.

The debate also touched on Bitcoin self-custody, with Deaton accusing Warren of favoring large financial institutions over individual investors. He criticized her for supporting a bill that, according to him, restricts Bitcoin self-custody for individuals while allowing banks to custody Bitcoin.

“Her bill bans Bitcoin self-custody in America, but she’s allowing banks to custody Bitcoin,” he said, highlighting what he sees as a contradiction in Warren’s policies.

Deaton also brought up his involvement in the Ripple (XRP) v. SEC lawsuit, where he advocated for XRP holders against what he called “regulatory overreach.”

He used this as evidence of his willingness to take on big institutions and stand up for small investors, suggesting that his efforts led to a recent $1 million donation from Ripple co-founder Chris Larsen to a super PAC supporting Vice President Kamala Harris.

Deaton argued that he has often clashed with crypto insiders, despite Warren’s claims that he is beholden to them.

“If I didn’t do what I did — sue the SEC on behalf of small retail investors—that donation to your candidate of choice, Senator, would not have happened. So, Madam Vice President, if you’re watching, you’re welcome.”

Crypto histories of Warren and Deaton

The crypto clash between Senator Warren and challenger Deaton in the Massachusetts Senate debate didn’t emerge out of thin air. Both candidates have deep histories tied to digital assets—though in vastly different ways.

Warren: The crypto critic

Warren has been a vocal critic of the crypto industry for years. Now seeking her fourth term as a U.S. Senator, she sits on both the Senate Finance Committee and the Committee on Banking, Housing, and Urban Affairs—two key bodies that oversee financial regulation, including crypto.

In May 2024, during a Senate Armed Services Committee hearing, Warren brought attention to how cryptocurrencies could undermine U.S. national security.

She cited intelligence reports indicating that Iran and North Korea have been using crypto to evade sanctions, with more than 50% of North Korea’s foreign currency revenues now reportedly coming from crypto.

Warren also grilled high-ranking military officials, pushing for stricter anti-money laundering regulations to prevent adversaries from exploiting the growing crypto ecosystem.

Her firm belief is that, without proper oversight, cryptocurrencies offer a gateway for bad actors to fund illicit activities such as terrorism, drug trafficking, and sanctions evasion.

But Warren’s opposition to crypto isn’t just about national security. She’s consistently argued that the industry exposes consumers to fraud, volatility, and environmental harm — particularly from energy-intensive Bitcoin mining.

Her push for tighter regulations is rooted in ensuring that the crypto world follows the same rules as traditional financial institutions, offering the same protections for average citizens.

Deaton: The crypto advocate

Deaton, a long-time crypto advocate, is best known for his work defending XRP holders in the high-profile Ripple v. SEC case. In 2021, Deaton filed a petition challenging the SEC’s claim that XRP, the native cryptocurrency of Ripple, was a security.

His petition argued that the SEC’s approach violated legal precedent, and his advocacy led to his appointment as amicus counsel in the case, representing over 75,000 XRP holders.

In addition to his legal work, Deaton runs CryptoLaw, a platform that provides updates on legal and regulatory developments in the crypto industry.

In February 2024, Deaton officially launched his bid for the U.S. Senate in Massachusetts to face off against Warren. He secured the Republican nomination and has made crypto regulation a central issue in his campaign.

In September 2024, shortly after securing the Republican nomination for the Senate, Deaton tweeted that the SEC’s actions in the Ripple vs. SEC case had caused small investors to lose over $15 billion due to its “gross overreach.”

He’s particularly critical of the enforcement-heavy approach taken by the SEC, which he argues has stifled innovation and punished ordinary investors rather than protecting them.

His frustration with Warren stems from her role on the Senate Banking Committee, which oversees the SEC. Deaton has repeatedly called out Warren for failing to hold the SEC accountable, stating:

“Since Warren won’t do it, when I get to the Senate, I will.”

His decision to run for the Senate was, in part, motivated by his desire to challenge the status quo of financial regulation and to hold regulators like the SEC accountable for their actions. Deaton has made it clear that, in his view, current lawmakers, including Warren, have failed to protect the very people they claim to represent.

What to expect next?

The 2024 U.S. elections are shaping up to be drastically different from those of 2020, particularly when it comes to the role of crypto. 

Back in 2020, crypto was barely mentioned in the presidential debates, with digital assets still in the shadows of the broader political arena. 

Fast forward to 2024, and crypto has become a key issue, driven by widespread adoption and relentless advocacy from within the space.

As Warren and Deaton gear up for their second debate on Oct. 17, the odds remain in Warren’s favor, with polling data showing her leading by 22.5%. 

However, Deaton’s pro-crypto stance could still resonate with voters looking for change, particularly those who see crypto as an engine for innovation and financial empowerment. 

Meanwhile, on the national stage, the U.S. presidential race is also heating up. According to Polymarket, Donald Trump currently leads with 60% odds against Vice President Kamala Harris’s 40%. 

The fact that crypto has become a major talking point in both Senate and presidential races reflects the industry’s growing influence, marking a turning point for both the sector and the American financial system as a whole.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

Pháp Lý

Ex-senior White House exec: Bitcoin reserve bill could be a ‘disaster in the making’

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As Senator Lummis pushes for Bitcoin to stabilize the U.S. dollar, Moe Vela warns of the risks. Read on.

During the Bitcoin 2024 conference in Nashville on July 27, US Senator Cynthia Lummis proposed that the U.S. government consider Bitcoin (BTC) as a strategic reserve asset to stabilize the dollar’s value and counter inflation. 

In a follow-up to her initial announcement, on July 31, Senator Lummis officially introduced the Bitcoin Strategic Reserve bill. This legislation aims to direct the U.S. government to establish a reserve fund specifically for Bitcoin, ensuring it is held securely across various geographic locations. 

The plan includes the government purchasing Bitcoin over five years and holding these assets for at least 20 years with the sole purpose of reducing the national debt, which has surpassed $35 trillion as of August 1. Lummis suggests that this reserve can help cut the U.S. national debt by half by 2045.

At the same conference, Donald Trump and independent presidential candidate Robert F. Kennedy Jr. also supported the idea of a U.S. Bitcoin reserve. 

Trump pledged not to sell the government’s Bitcoin holdings, while Kennedy advocated for a more aggressive approach, suggesting the purchase of 500 bitcoins daily until a reserve of 4 million bitcoins is accumulated.

Despite the political backing, Lummis acknowledges that her legislation is unlikely to pass before the 2024 elections. However, the rising political interest in Bitcoin signifies a shift from the previous stance of the government.

Let’s delve deeper into this bill, its potential implications, and the broader context of Bitcoin’s role in the US economy.

Decoding the bill

The “Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024,” also known as the “BITCOIN Act of 2024,” outlines a detailed plan to integrate Bitcoin into the U.S. financial system.

A key component of the bill is the Bitcoin Purchase Program, which mandates the annual purchase of up to 200,000 Bitcoins over five years, totaling 1,000,000 Bitcoins. 

Once acquired, these Bitcoins will be held in the Strategic Bitcoin Reserve for at least 20 years to ensure stability and security amid market volatility. During this period, the Bitcoins will be used exclusively for retiring federal debt instruments.

The bill claims that the Secretary of the Treasury, in consultation with the Secretaries of Defense and Homeland Security, will implement advanced physical and digital security measures to protect the reserve. 

To maintain accountability, the“BITCOIN Act of 2024” requires regular monitoring and auditing, along with a quarterly Proof of Reserve system. This system will involve public cryptographic attestations and independent third-party audits to verify the holdings.

The bill also addresses the management of digital assets from Bitcoin forks and airdrops, stipulating that any new assets acquired through these mechanisms be retained in the Strategic Bitcoin Reserve for at least five years to ensure proper accounting and storage.

Additionally, it allows for voluntary state participation. States can choose to store their Bitcoin holdings in segregated accounts within the Strategic Bitcoin Reserve, benefiting from federal security and management protocols while retaining full control and legal title over their assets.

To manage the costs of setting up and maintaining the Strategic Bitcoin Reserve, the bill suggests using funds available within the Federal Reserve System. 

These funds also include surplus earnings that are usually given to the Treasury. It also considers reevaluating the value of gold certificates held by the Federal Reserve to help fund the reserve.

What do experts think?

To gain a deeper understanding of the potential impact of Senator Lummis’s Bitcoin Strategic Reserve bill, crypto.news spoke exclusively with Moe Vela, an American attorney and political advisor. 

Vela is the first Hispanic to serve in two senior executive roles in the White House, first during the Clinton administration as Chief Financial Officer and Senior Advisor for Latino Affairs in the Office of Vice President Al Gore, and later during the Obama administration as Director of Administration for Vice President Joe Biden.

Vela is unequivocally critical of Lummis’s proposal, describing it as “a disaster in the making.” He argues that investing taxpayer money in Bitcoin, a cryptocurrency he views as “backed by literally air and whimsy,” would be one of the most irresponsible governmental actions he has encountered in his public service career. Vela points out:

It demonstrates that the Senator and other bitcoin enthusiasts do not fully understand that Bitcoin is too risky, declining in market share, has no organizational infrastructure, and its anonymity literally means she is suggesting our nation co-invest with the possibilities of Kim Jong Un, Vladimir Putin, or other nefarious characters or organizations.

When asked whether the Republican agenda supporting cryptocurrency is a legitimate stance or a move to destabilize Democrats, Vela is skeptical. He suggests that the GOP’s advocacy for crypto appears insincere and more like political pandering:

The GOP stance on crypto would be viewed as more sincere and genuine if it wasn’t so blatantly pandering to a vital pool of voters. When you are recommending investing taxpayer money in an assetless crypto and calling for little to no regulation after all the crypto folks who are in prison, it’s hard to take them seriously and easy to see it for what it really is—political bluster.

Vela’s skepticism extends to the potential economic impacts of adding Bitcoin as a reserve asset. He argues that the cons far outweigh any possible pros, stating bluntly:

Frankly, I can’t think of a pro to adding BTC as a reserve asset. It would be irresponsible and idiotic to do so.

Instead, Vela advocates for focusing on cryptocurrencies backed by tangible assets and regulated by bodies like the SEC:

We in the crypto community should be encouraging our government to focus on cryptocurrencies that are backed by tangible assets, report to the SEC, and strive every day to be compliant with the few parameters and policies that exist thus far.

The road ahead

The U.S. national debt is indeed spiraling out of control. If left unchecked, it could lead to severe economic consequences such as higher interest rates, reduced public investment, and a potential loss of investor confidence. 

The Congressional Budget Office projects that without key policy changes, the debt could reach 166% of GDP by 2054, further exacerbating the U.S. economic troubles.

Bitcoin, with its impressive compound annual growth rate (CAGR) of 42.3% over the last five years, presents a unique opportunity to mitigate the rising debt. However, it is not without its risks. Bitcoin’s volatility and the nascent stage of its market infrastructure are crucial factors to consider.

Despite criticism from figures like Moe Vela, not everyone shares his view. Sam Lyman, Director of Public Policy at Riot Platforms, views Lummis’s efforts as essential for the Bitcoin community and believes her proposal could pave the way for innovative financial strategies.

However, the success of such a proposal depends on various factors, including the implementation of strong security measures, regulatory clarity, and the ability to manage the inherent volatility of Bitcoin. 

As the debate continues, it is clear that Senator Lummis’s proposal has sparked a discussion about the future of digital assets in national finance. Whether this innovative approach will prove to be a solution to the national debt crisis or a risky gamble remains to be seen.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

Bitcoin

Why the U.S. doesn’t need a tax on mining: Senator Lummis explains

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Senator Cynthia Lummis released a report opposing the proposed 30% energy excise tax on miners.

The politician published a report entitled “Powering Down Progress: Why A Bitcoin Mining Tax Hurts America,” which examines the Administration of U.S. President Joe Biden’s proposal to introduce a 30 percent excise tax on the energy consumed by Bitcoin (BTC) miners.

What the report says?

However, according to Lummis, this move by the Biden administration could destroy the booming American Bitcoin mining industry, which began to develop after China banned mining.

Source: Bitcoin mining paper

Senator believes the tax could push industry out of the country and into the arms of other countries. She also noted that the Treasury’s reasons for introducing the tax are based on outdated views about energy use and technology.

Lummis cited the Bitcoin Energy Sustainability and Emissions Tracker as evidence that Bitcoin mining is cleaner than commonly thought, noting that up to 52.6% of BTC mining could be emissions-free.

“In terms of the amount of energy used, Bitcoin mining uses approximately as much energy as standard household appliances. For example, a recent KPMG report found that the total energy used by bitcoin miners is roughly the same as the total energy used by tumble dryers.”

Bitcoin mining paper

The politician also drew attention to the growing role of Bitcoin mining facilities in ensuring the security of the energy system. Mining operations present large, dynamic electrical loads that can be used to balance and redistribute energy across electrical networks as needed.

Lummis also called the proposal a poorly conceived policy that could harm the very goals it is intended to achieve. Thus, the Administration claims that Bitcoin mining threatens the operation of local energy systems but does not provide any evidence. However, research shows that Bitcoin mining strengthens energy networks.

Finally, the senator explained that imposing a 30% excise tax on miners would disincentivize them from finding sustainable forms of energy and new methods of processing energy.

Bitcoin mining tax

In March, the U.S. Presidential Administration proposed a 30% excise tax on electricity used for mining cryptocurrencies like Bitcoin.

The document justified increasing energy consumption to extract digital assets by stating that it harms the environment and increases energy prices.

The tax is expected to be introduced gradually: in 2025, the rate will be 10%; next year, it will be 20%, and then it will reach 30%. The taxable base will be the electricity consumed for mining, even if it is produced from sources not connected to the network.

Lummis criticized the initiative. In her opinion, this tax will deprive the crypto industry of “any foothold” in the United States.

The first attempt to introduce a tax on mining

In May 2023, the Council of Economic Advisers under the Biden administration already proposed including a 30% tax on the electricity used by miners in the federal budget. The proposal called for a 10% tax on miners’ electricity use starting in 2024, gradually increasing to 30% by 2026.

Politicians have pointed to miners’ significant electricity consumption and criticized its negative environmental impact. According to the presidential Administration’s calculations, DAME could generate revenue of $3.5 billion within ten years. The initiative caused a backlash from sizeable American mining companies, which assessed it as an attempt to marginalize the cryptocurrency community and push crypto businesses out of the country.

Politicians also said that crypto mining pollutes the environment and consumes a lot of electricity during rising energy prices. This tax would allow companies to consider better the harm they cause to society, according to the White House.

The White House emphasized that intensive electricity consumption by miners can also increase electricity prices for the population and lead to unstable power grid operation —equipment overloads and service interruptions are possible.

Another reason for introducing such a tax is that mining crypto assets does not bring local and national economic benefits.

American miners consume electricity as much as an entire state

Although Americans started mining about a decade ago, the industry has grown significantly since 2019. According to analysts, the recent rise is mainly due to the movement of cryptocurrency mining operations to the United States from China after the republic introduced a crackdown on miners in 2021.

Last year, crypto miners accounted for 0.6% and 2.3% of all U.S. energy consumption. According to figures from the Energy Information Agency (EIA), the entire state of Utah spent about the same amount of electricity.

At the end of last year, about 137 farms in the country belonged to cryptocurrency mining companies. The equipment is spread across 21 states, including the most active in Texas, New York, and Georgia. In 2023, Bitcoin mining energy consumption reached between 0.2% and 0.9% of global energy consumption.

How will the law affect mining in the U.S.?

Last year, the U.S. ultimately abandoned ​​imposing an additional 30% tax on industrial crypto-mining businesses. If the law is abandoned again, the mining industry in the United States will kick-start the development.

This can become strategic for the United States, allowing it to maintain a leading position in the digital economy and attract high-tech investment on the world stage. Therefore, it is likely that the proposed restrictions and increases in tax rates for miners will not be accepted and implemented.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News