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A quick look at the current political landscape will tell you that cryptocurrency is far more represented than ever before. Years ago, cryptocurrency was a relative newcomer to the political scene, barely acknowledged by the powers that be, with industry stakeholders fighting for it to be recognized.
Now, we are in an era of greater political visibility for crypto, as well as institutional support. But not everyone is optimistic about the current trajectory. In fact, a California lawmaker is looking to put a cap on how prominent political figures can engage with and potentially profit from the asset class.
Currently, the crypto industry is seeing both financial and political gains. Last year saw the approval of spot ETFs for both Bitcoin and Ether, with the former reaching a new all-time high. This has created a ferocious appetite in the market for not just legacy tokens like Bitcoin and Ether but also new ones. Pre-sales of upcoming tokens have raised millions of dollars, and once the tokens hit the market, they reach a wide audience and often perform well. As Shraddha writes, the best upcoming crypto presales are a hot commodity these days, and this is only going to increase over time.
On the political front, crypto played a much bigger role in the last US presidential election, with current US President Donald Trump heavily endorsing the asset class and courting favor from major stakeholders. It is also notable that the current president launched Bitcoin-related merchandise last year, which went on to sell out, as well as his own official meme coin this year. It’s been estimated that while Trump and his team profited millions from this drop, many investors lost money after its values significantly declined.
The same was said of his wife Melania’s token, which saw a strong debut but also declined in value. Amidst these losses, there has come a serious debate about whether it is ethical for politicians to release crypto tokens and profit from them. According to California lawmaker Rep. Sam Liccardo (D-Calif.), it is not ethical and should not be legal.
A new bill put forward by rep Liccardo would make it illegal for politicians to release meme coins while in office. The bill is called the Modern Emoluments and Malfeasance Enforcement (MEME) Act and would include the president, vice president, members of Congress, and high-level members of the executive branch.
If passed, these public office holders would not be able to release any new tokens into the market, and if they already had tokens, they would be bored from promoting them. If they were to go on to violate this, they would be subject to penalties.
“Let’s make corruption criminal again. Our public offices belong to the public, not the officeholders,” Liccardo said.
The bill has over a dozen sponsors currently and seems quite timely, given the recent events. Cryptocurrency is becoming more prominent in both the business and political world, and many stakeholders believe that this line needs to be drawn.
The meme coin sector has been the source of controversy for several years now, and this will only get worse as crypto intersects more with politics. Meme coins are tokens that are based on memes, lore, and pop culture references. While some meme coins have use cases, some are based entirely on hype and, as such, have a high failure rate. This is likely why the Trump and Melania tokens did so poorly, as outside of the initial hype of buying a token associated with the first couple, they don’t really do anything.
Given that Trump has much influence over the buying public, there is concern that he could financially exploit his followers by selling them a worthless digital asset. What’s more, other politicians might choose to follow in his footsteps and release meme coins to the public. Some industry stakeholders have expressed concern that this will become a trend, which only devalues the crypto industry and defrauds investors in the end. This sort of law being in place means that a clear line is drawn between political influence and crypto-entrepreneurship. In the same way that there are restrictions on public figures’ investments in traditional assets, some feel that crypto needs the same.
Changes to the political scene mean that not only might your favourite public official push for crypto regulation, but they might also try to sell you a meme coin with their name and image. Some consumers might be excited about this development, but Rep Liccardo clearly believes it is to their detriment. This law, if passed, could go on to define the treatment of cryptocurrency by public officials and to what extent they may participate in the market. It could also go on to form the foundation for crypto regulation in other countries.
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