Bonus Episode: Sen. Elizabeth Warren on Crypto’s Cold, Dark Winter

Michael Tomasky: I’m Michael Tomasky, editor of The New Republic. 

Felicia Wong: I’m Felicia Wong, President and CEO of the Roosevelt Institute.

Michael Tomasky: And this is How to Save a Country, our podcast on the ideas and the people contributing to a new political vision and a new economic vision for the United States. We connect the economy, democracy, and freedom.

Felicia Wong: Because progressives need a common purpose and a common strategy if all of us, as Americans, are going to win. That’s what I think.

Michael Tomasky: I’m with you there. I’m into that.

Felicia Wong: So Michael, 

Michael Tomasky: Yes…

Felicia Wong: You have probably, I know this is your favorite topic, Michael, but you’ve probably been hearing a lot of news lately about crypto. And none of the news we’ve heard lately has been good. I think in crypto parlance times like these, big crashes, lots of scandal, these are times that we might call a “crypto winter.”

Michael Tomasky: And a very chilly, frigid one at that. 

Felicia Wong: Yeah, the bomb cyclone of cryptocurrency. 

Michael Tomasky: Yeah, there it is. 

That’s where we are right now. Anyway, we thought for today’s bonus episode, we would share a little moment from our conversation with Senator Elizabeth Warren. 

Michael Tomasky: She’s been, as you might expect, pretty tough on crypto from the beginning, hasn’t she?

Felicia Wong: Oh yeah. I wouldn’t expect Elizabeth Warren to be a lover of some mysterious financial tool there, in fact, she has been quite a skeptic from the very beginning. And it will be interesting to see over the next couple of months whether more people, whether more members of Congress come around to her way of thinking.

Michael Tomasky: Let’s play the clip. 

Felicia Wong [clip]:  Okay, Senator, you’ve been skeptical of cryptocurrency for a long time. You’re one of the first people to be skeptical, in part because crypto is an unregulated market and you always think markets need regulations to protect consumers.

And also you’ve been concerned about the climate harms of crypto. So now we see the implosion, explosion…I don’t know, but this blow-up of FTX. And so with this making the news, do you think that your view of crypto is going to be more widely shared in the future?

Senator Warren [clip]: I think more people are coming to understand that much that we’ve seen around crypto is just smoke and mirrors. And what always troubles me when something new like this comes along, there’s no regulation, is that there’s no transparency. So it turns out that people thought the trading was working one way, but the insider who understands how to pull the strings actually is emptying out people’s accounts, using the money for all kinds of shockingly bad purposes, and leaving the customers completely in the dark and unprotected.

It’s pretty clear to me that we need a whole lot more transparency in this system, that we need a whole lot better consumer regulation, that we need enforcers, a cop on the beat that is willing to get out there and enforce some rules around crypto. And then, I gotta keep raising this one every time, all the others are about the economics, but we have to keep looking at the question of crypto mining and the climate implications of this. Crypto mining is sucking up more energy than whole nations. And the consequence of that is that here we are trying to pass, you know, climate bills in Washington that will reduce our carbon emissions. And just as we’re working to get everybody moved over to clean cars, for example, to electric cars, we’ve got crypto over there firing up more old out-of-date power plants because they’re sucking down all of this energy. That makes no sense. For no productive activity except to play in the crypto game. So we got a lot of work to do in this area and I think the latest crash shows us we’re running out of time to get it done. 

Felicia Wong [clip]: Yep. Keep telling that story.

Michael Tomasky: So Felicia, first of all, tell people how crypto mining uses more energy than whole nations. This sort of boggles my mind because they’re not, this not, does not actually involve the physical production of anything, and yet it uses all this energy. Explain? 

Felicia Wong: Yeah. Well, I’m really glad the Senator brought that up because the climate implications are so often overlooked in our conversation about crypto and cryptocurrency. But it is just remarkable, you know, as of last fall, August of 2022, the White House estimated that the total global energy uses for all crypto assets were greater than many individual countries, the Senator was right. Big countries, countries like Argentina, countries like Australia. It is just incredible that basically, these are sets of computers using this much energy, to try to verify the ledgers on which cryptocurrencies like Bitcoin are based, so that’s what it is. It’s basically computers sucking down and using so much energy.

And then as they heat up, as you know, very large computers, servers, et cetera, do you need to establish cooling systems for those computers. So yeah, Michael Bitcoin isn’t really making a “coin,” but it’s certainly using a lot of energy for, frankly, very little political or social ends as far as I can see – socially good ends.

Michael Tomasky: It’s, yeah, it’s, it’s mind-boggling. It’s just wild stuff. I’m not gonna sit here and pretend that I’m an expert on this subject. But obviously it really, really is crying out for regulation. Senator Warren has been saying so, Senator Sherrod Brown also has been saying so. I don’t know, obviously with the Republicans running the house, nothing like that is gonna happen in the near future. But I, you know, this is one of those cases that even with the Democrats having the run of the place, and let’s pretend for the moment that they do, come January 2025, it seems to me there are still plenty of Democrats who wouldn’t go along with Elizabeth Warren and Sherrod Brown on something like this. It’s just like – the Democrats as a whole just aren’t really there, are they?

Felicia Wong: There is this really big debate. Should we regulate crypto more? Should the government try to regulate crypto more? Is it actually a currency? In many countries, it’s not actually a legal tender, so is it really a currency? Or is it more like a security, something that you can invest in? Is it really just an investment mechanism? If so, then you know, many, many, many different government agencies, including the SEC and the FTC, could get into regulating it. That’s what Senator Brown is calling for with this kind of whole of government approach to regulating crypto. That’s what he asked the Biden administration to do late last year.

But then some people, mostly Republicans, but some Democrats too, actually say, no, it’s –  crypto’s just a commodity. It’s just like corn or wheat – doesn’t really need to be regulated. And because it’s so hard to even understand what crypto is, I think that’s the reason we are in this kind of debate about it.

And that also allows exchanges, quote-unquote “exchanges,” like FTX, to do all kinds of nefarious things and to basically run what do end up being complete scams.

Michael Tomasky: I think the politics of it should be really straightforward for people, you know? It’s looking out for regular folks against big interests. It’s similar to regulating Facebook in that way. You know, I haven’t looked at polls about crypto particularly, but I have looked at a number of polls when people are asked, should Facebook be broken up or regulated? It’s like 72%, 74% say yes. You know, it’s not a close question.

Felicia Wong: And that changed over time, though. That moved over time in  around 2017-2018. So that changed too. So maybe people’s views of crypto can change too and will change after the whole Sam Bankman-Freid FTX debacle. But I hear what you’re saying, Michael, about the politics of this, which are very Warren-esque politics, very progressive politics.

The point of government here should be to look out for the average consumer, the average American, the average voter, and to not do things to prop up big interests. Even if those interests aren’t as shady as some of crypto seems to be. We really shouldn’t be doing things for the few at the expense of the many.

That’s what I hear you saying, Michael.

Michael Tomasky: That’s what I’m saying. And Biden, you know, Biden’s pretty good on a lot of this stuff. I mean, you know, his antitrust efforts have been quite strong. But, you know, the party as a whole just isn’t there yet, in terms of establishing its identity as being, you know, fighters for the working class.

Felicia Wong: Yes, well, you know, on this question of fighters against crypto scams, this is a place where I really think we should ask our listeners for their thoughts. My guess is they know at least as much as we do about all of this, What’s been their experience with the market? Has it been exciting for them? Have they lost a lot of money? So I think they should tweet at us. 

Michael Tomasky:  I’m @mtomasky. That’s M-T-O-M-A-S-K-Y.

Felicia Wong: I’m @FeliciaWongRI. I wanna know what you think about crypto 

Michael Tomasky: Hey Felicia, what’s our next bonus episode?

Felicia Wong: Our next minisode, actually Michael, it is you. It’s you and Brad DeLong. How about that? You and Brad DeLonge talking about Neoliberalism and the Cold War.

Michael Tomasky: Oh yeah, I remember that.

Felicia Wong: Looking forward to it. 

Felicia Wong: How to Save A Country is a production of PRX in partnership with the Roosevelt Institute and The New Republic. 

Michael Tomasky: Our coordinating producer is Cara Shillenn. Our lead producer is Alli Rodgers. Our executive producer is Jocelyn Gonzalez. Our mix engineer is Pedro Rafael Rosado.

Felicia Wong: Our theme music is courtesy of Codey Randall and Epidemic Sound. Other music is provided by APM. How to Save a Country is made possible with support from Omidyar Network, a social change venture that’s reimagining how capitalism should work. Learn more about their efforts to recenter our economy around individuals, community, and societal well-being at omidayar.com.