Does the government need to protect Black people from crypto? Congressman Brad Sherman (D-CA) thinks so.
At a Congressional hearing this week, Sherman compared crypto to sub-prime mortgages, and asked a Treasury Department official if “those of color will be left holding the bag if we see a collapse in cryptocurrency or stablecoins?”
Whatever his intentions, the reaction on Twitter—especially among Black users—was savage, accusing the congressman of being patronizing and out of touch. Ryan Selkis of Messari suggested it was ironic that Sherman, a known ally of the banking industry, was framing the topic as a racial issue while refusing to debate his pro-crypto primary challenger Aarika Rhodes, who is Black. Daniel Buchner, head of decentralized identity at Block, pointed out Sherman’s “patronizing attitude toward people of color who his policies have hurt.”
The controversy raises questions about crypto and race (the full nuances of which are admittedly beyond the lived experience of your Roberts on Crypto correspondents) and also about the role of elder Democrats when it comes to defining the party’s positions on crypto.
One place to begin is the fact that multiplesurveys show Blacks and Hispanics are more likely to own crypto than the rest of the population. Sherman implied this is because crypto is a scammy financial product like sub-prime mortgages, which were heavily marketed to low-income communities. A better explanation is that crypto is a permissionless form of money that is especially helpful in neighborhoods where traditional financial institutions often refuse to operate, or exploit vulnerable customers—there is growing evidence this is the case.
The popularity of crypto among Blacks, especially, may also stem from past discriminatory practices like red-lining that made it harder to buy houses and build intergenerational wealth. Unlike applying for a mortgage, you don’t need anyone’s permission to buy Bitcoin. And as Black crypto billionaires like Arthur Hayes can attest, crypto has been a phenomenal investment over the last decade.
That’s not to say everyone should go buy crypto, especially given its volatility—and Decrypt doesn’t dispense investment advice. There are certainly safer places to park your money. But the notion that the federal government should protect certain racial groups from crypto—which is a form of technology—seems racist. This is especially the case when the loudest anti-crypto voices are white millionaires like Sherman and Senator Elizabeth Warren (D-MA), who said in July that crypto puts the financial system “at the whims of some shadowy, faceless group of super-coders and miners.”
And this brings us to the Democratic party, a topic we’ve raised before in this column. Sherman’s comments last week underscore how the party leadership remains inexplicably hostile to crypto even as a growing number of Americans, especially young ones, embrace it. This looks like a huge strategic mistake, especially at a time when Republicans are wisely warming to crypto holders, who are poised to write sizable checks ahead of the mid-term elections.
The most ironic part of all this is that, even as some Democratic leaders like Warren, Sherman, and Biden castigate crypto, younger figures in the party are leaning into it. Those include Ritchie Torres, a congressman in the Bronx who, at the same hearing where Sherman spoke, made an impassioned case for crypto as an accessible financial tool and a way to lower remittance costs. Meanwhile, on a recent list of nine pro-crypto candidates running for Congress, the majority were Democrats of color. They get it in a way their party’s leaders do not.
None of this is to say there’s no place to discuss crypto and race. The past year has brought depressing incidents, especially involving NFTs, that reveal the same ugly racist currents in the crypto world that exist within broader society. But these shouldn’t define what crypto is all about: a permissionless set of tools open to everyone.
This is Roberts on Crypto, a weekend column from Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt Debrief email newsletter to receive it in your inbox every Saturday. And read last weekend’s column: The Shine Comes off Solana.