By Alex Tapscott
Despite the cliché that Web3 is dominated by affluent libertarian-leaning white men, it turns out that it is in fact broadly popular across a wide swathe of the population in the U.S., Canada and elsewhere. This makes sense: the foundational technologies of Web3 such as blockchains, digital assets and smart contracts are neutral and apolitical. A blockchain is about as “right wing” or “left wing” as a refrigerator. Just as everyone deserves access to cold milk and fresh vegetables regardless of their politics, Republican and Democrats alike deserve and indeed want more access to Web3 tools.
This is supported by the data: 44 percent of digital asset holders in the United States are people of color, according to a survey by the University of Chicago’s National Opinion Research Center conducted earlier this year.i Furthermore, another survey conducted by Morning Star in the United States revealed that while 10 percent of the fully banked owned digital assets, 37 percent of the underbanked own themii, using digital assets to make payments and store value, as well as invest and trade.iii
Web3 offers something for every political stripe. Those on the left should like that it lowers barriers for financial inclusion and creates more avenues for the unbanked to save and move money. It also creates new ways for working people in the gig economy to earn extra income, for example in the play-2-earn gaming space. By decentralizing financial services, it reduces the relative power of Wall Street banks, a long-time bogeyman, and gives internet users more privacy over their virtual selves, which may loosen the grip of Web2 companies, who have come under scrutiny for their monopolistic practices, especially by Democrats.
For those on the right worried about censorship and the marginalisation of conservative viewpoints by the mainstream media, Web3 applications could offer a respite. They are apolitical, censorship resistant and difficult to shut down. Bitcoin specifically is seen as an off-ramp from government-controlled money. Cryptoassets can also be directed towards political and charitable causes privately, anonymously and peer to peer, a boon to those on the right and left. Finally, Americans of all stripes are willing to try out new technology tools. Their culture of innovation and experimentation is essential to America’s economic model and success.
It is no wonder, then, that on the eve of the Midterm elections, a recent poll found more than half of Americans surveyed (53%) agree that “cryptocurrencies are the future of finance,” including 59% of Democrats and 52% of Republicans, with 44% of Americans noting that they expect to have crypto as part of their investment portfolio in the future.”
Many Web3 users and companies also want elected officials take action to clarify and when necessary, create new policies for this new asset class and technology. As such, there is a rare window for politicians on both sides of the aisle to work together towards a new framework for Web3, as they did for Web1 when the Telecommunications Act was overhauled.
So far, many in government across the political spectrum have kept an open-mind. Joe Biden’s White House released a comprehensive executive memo earlier this year that struck a reasonable balance between the need for sensible regulation and a recognition that this new technology holds immense promise for the country. In Congress, Democrat Kirsten Gillibrand and Republican Cynthis Lummis worked together on the Responsible Financial Innovation Act Bill, which sought to clarify rules around digital assets. Some governors and mayors, seeing the potential for jobs and investment in their state, have opened their arms to the industry, such as Governor Gregory Abbott of Texas and Mayor Suarez of Miami (both Republican). In New York, Democratic Mayor Eric Adams has said he wants to make the city a leader in DeFi and Web3, even volunteering to take the first three months of his salary in Bitcoin.
Still, there have been no new policies, and still much confusion, leading to a process of ‘regulation by enforcement,’ by the SEC and CFTC, which is politically contentious as it is less “democratic” than creating laws in congress in a transparent and deliberative process. Still, in the absence of new policy, one can hardly fault most regulators for doing their jobs. The recent collapse of FTX and stunning fall from grace of founder Sam Bankman Fried, who was the face of the industry in D.C., will certainly accelerate enforcement action. Centralized companies that custody assets for customers clearly need better regulation, including full disclosures and audits of customer deposits and corporate financials. Differentiating between crypto ‘banks’ like exchanges and the open source technologies of Web3 will be the definitive policy challenge for this new industry.
Ultimately, Web3 is now a big business, and the industry has recognized the need to engage with policymakers and is lobbying aggressively for its interests. As long-time crypto entrepreneur Eric Voorhees said recently, “if you’re not at the table, you’re on the menu.” So far, Web3 businesses and executives have spent $73 million to influence the outcome of the election and they are lobbying their own users to make the case for crypto with their local elected officials. Coinbase, a popular exchange, even created a dashboard that gives congresspeople a ‘grade’ based on their comments and actions towards the industry. Ultimately, the maturation of Web3 lobbying is an inevitable sign of the times that the industry has hit the big leagues. Time for elected officials to treat it that way.
