Elizabeth Warren and John Deaton Clash Over Crypto During 1st Debate

Deaton criticized Warren’s anti-crypto focus and accused her of neglecting more important issues like inflation and banking access. Warren defended her stance, and advocated for crypto regulation to align with banking rules. Meanwhile, Coinbase is working hard to educate lawmakers like Warren on the relatively low percentage of crypto that is actually used for illegal transactions. The Trump family’s crypto project, World Liberty Financial, faced a slow start after going live as only 3.4% of its $300 million goal sold.

Deaton Slams Warren’s Anti-Crypto Focus

In their first debate for the US Senate seat in Massachusetts, Senator Elizabeth Warren and crypto lawyer John Deaton clashed over their positions and opinions on crypto regulation and other key issues. Deaton, who is the Republican candidate, criticized Warren for prioritizing the formation of an “anti-crypto army” over addressing serious concerns like illegal immigration, inflation, and the struggles of the lower and middle classes. He also questioned why Warren decided to focus on crypto regulation and not these pressing challenges.

Warren and Deaton during their debate (Source: CBS Boston)

Warren defended herself, and stated that while she actually doesn’t oppose people buying and selling crypto, she believes the industry has to stick to the same rules as banks and stockbrokers, especially with regards to consumer protection and the enforcement of anti-terrorism laws. She also once again argued that crypto is very often used for illicit activities, like financing terrorism and drug trafficking, which makes regulation crucial.

While both candidates were able to agree that the traditional banking system has failed many Americans, Deaton still accused Warren of neglecting the issue of banking access. He specifically referenced a December Senate Banking Committee hearing where Warren questioned JPMorgan CEO Jamie Dimon. 

According to Deaton, she should have focused more on banking failures instead of crypto-related crimes. Deaton also criticized Warren for not addressing JPMorgan’s connection to Jeffrey Epstein’s child sex trafficking operation during the hearing.

Warren countered this  by pointing out that 90% of the financial support for Deaton’s campaign came from the crypto industry, which suggests that those backers will likely expect favors in return if he were elected. Deaton dismissed Warren’s statement, and shared that she often takes positions that anger the crypto industry and that she still has ongoing conflicts with several “crypto billionaires.”

Massachusetts senate polls (Source: The Hill)

The debate took place after Deaton secured the Republican nomination in Massachusetts on Sept. 4. Warren currently leads Deaton by 22.5% in polling, according to The Hill’s 2024 Elections data, as she plans to extend the Democrats’ 11-year control over both of the state’s US Senate seats.

Education Key to Better Crypto Laws

Coinbase has been making it a priority to educate the public and lawmakers to fight against misleading narratives about cryptocurrency’s links to illicit finance, according to the exchange’s chief security officer Phillip Martin. At the Ripple Swell conference, Martin shared that better-informed lawmakers can make more effective decisions, and that a lack of education very often leads to poor legislation and slows down innovation in the crypto space. 

Coinbase has been helping US lawmakers understand the safety, security, and consumer protection measures that are in place to prevent illicit activities in the cryptocurrency industry. According to Martin, education is crucial when it comes to preventing misconceptions about crypto, especially for people who form opinions based on media headlines that don’t always reflect the full picture. 

He argued that the belief that crypto is heavily used for illegal activities is a very misleading narrative that needs to be corrected. He referred to a Coinbase report from Oct. 1 that pointed out that only about 0.34% of cryptocurrency transactions involve illicit activity. This is very different from the estimated 33% of cash transactions in the US used for criminal purposes. He also shared that blockchain technology provides transparency and measurable data on transactions, which is something that is much harder to achieve in the traditional financial system.

Share of illicit crypto transaction volume (Source: Chainalysis) 

With the US elections just around the corner, Martin is optimistic for a more crypto-friendly stance from the next president. He also mentioned that the Democratic Party may be softening its approach to crypto as it recognizes that a big portion of the population supports a more fair and free financial system.

Crypto Companies Should Avoid Surprises

New York Department of Financial Services (NYDFS) head Adrienne Harris and Ripple’s chief legal officer Stuart Alderoty also recently talked about  the current state of crypto regulation and how firms can better navigate the regulatory landscape at the Ripple Swell event in Miami.

Harris believes that crypto companies should be proactive and transparent when dealing with regulators, and stressed how important it is to openly communicate to avoid surprises. She advised the industry to approach regulators early when sharing their long-term business plans even if New York has a more progressive stance on crypto compared to federal regulations.

During the discussion, Alderoty asked Harris what advice she would give to the industry with regards to interactions with regulators. Harris responded that regulators should never be surprised by news about the industry from the media. Instead, companies should make sure that regulators are fully informed ahead of time about any major issues. She also encouraged firms to present their five-year business plans when engaging with regulators to boost understanding and cooperation.

The conversation also touched on the broader state of US crypto regulation, Harris acknowledged that the country has lagged behind Europe and other regions in developing clear guidelines. Although the 2024 US presidential election initially appeared to be a potential referendum on crypto policy, both candidates have expressed positive views toward the sector. 

This now leaves supporters in the crypto industry divided, with some backing Donald Trump due to frustration over the Biden administration’s regulatory inaction, while others support Kamala Harris for her progressive economic platform.

Trump Family Crypto Project Struggles

Meanwhile, the debut token sale for the Trump family’s crypto project, World Liberty Financial (WLFI), had a slow start after selling only 3.4% of its $300 million goal as its website crashed soon after launch. The sale went live on Oct. 15, and offered 20 billion tokens priced at 1.5 cents each. 

After 14 hours, just 687 million tokens, or about $10.3 million worth, were sold. Despite claims of over 100,000 sign-ups before the launch, only 6,832 unique wallet addresses currently hold WLFI tokens, according to Etherscan data.

The World Liberty Financial website experienced downtime very shortly after the token sale started, which was reportedly due to high traffic. Many users reported that they encountered a “website under maintenance” notice. 

The project’s white paper reveals a total supply of 100 billion WLFI tokens. A total of 35% will be allocated to token sales for eligible participants. The remaining tokens are earmarked for community growth, initial supporter allocation, and the team.

The Trump family played a central role in the promotion of WLFI. In fact, former President Donald Trump was named as the platform’s “Chief Crypto Advocate,” and his sons Barron, Eric, and Donald Trump Jr. serve as “Web3 Ambassadors.” Trump took to social media on Oct. 15 to promote the token sale, and openly shared his belief in crypto as the future of the digital economy.

In the US, WLFI tokens are available only to accredited investors due to their status as unregistered securities. The tokens are not tradable but will act as governance tokens for an upcoming Ethereum-based decentralized finance (DeFi) platform. The platform will operate as an instance of the Aave DeFi protocol, and will allow users to borrow and lend crypto, interact with liquidity pools, and transact with stablecoins.