A Case Study of the Electoral Power of Web3
With 62% of Latino voters projected to own digital assets, Gary Gensler’s lone crusade against digital assets represents a bad policy choice that will translate into really bad politics for Democrats
Having argued recently that my fellow Democrats need to not only heed the emerging Web3 Voter but understand that to these voters, a candidate’s support for web3 signals that they are on the side of change that benefits everyday people, versus the side of the status quo that benefits legacy institutions, I’ll share a case of how web3 voters and policies could intersect for 2024—as a way to highlight what’s at stake for Democrats before it’s too late.
With little time left in this hugely consequential midterm cycle, a horde of political pundits (who isn't one these days?) is debating what could tip the scales. Some nominations are very of the moment: the Dobbs decision, the stock market, the Saudis. Others are long-standing, proven decisive dynamics. Youth turnout is one. Independent suburban women are another.
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Now, add the Latino vote as potentially more in play now and for the long term than previously believed.
What makes the Latino vote critical in who will win the Senate and key House seats in 2022, and the White House in 2024, is the emerging realization that Latinos are not a monolithic bloc that will vote en masse for Democrats. Within the “Latino voters” cohort are in fact segments of voters who stand out as something increasingly rare in today's highly polarized politics: persuadable swing voters who, surveys show, are moved by policy issues, particularly bread-and-butter issues such as the economy and safety.
With just a few weeks to go, smart political operatives who recognize this rare opportunity are crashing to identify the kind of specific issues that speak to the values of these Latino voter segments and can be distilled into micro-targeted ads and social media content.
But the emergence of this persuadable Latino voter is especially important for 2024 and beyond. For Democrats, maintaining their current margins with Latinos is foundational to their ability to hold the White House and win competitive Senate races and many House contests. Recent New York Times coverage of a Latino voter focus group forecast that because of the nature of the policy issues that resonate for them, over the long term, Republicans have a “serious opportunity to attract more and more Latinos to their ranks.”
In this context, Securities and Exchange Commission Chair Gary Gensler’s lone crusade against digital assets represents a bad policy choice that will almost certainly translate into really bad politics for Democrats in 2024 and beyond. The easy remittance of money to loved ones back home is a popular use case for digital assets among web3 voters, and is exactly the type of values-based kitchen-table issue that matters to key segments of Latino voters.
Let’s unpack this, from the policy issue, to the politics, to the real electoral peril for my party that could be wrought by Chairman Gensler’s one-man campaign.
For many immigrant families, a big part of their American Dream has been how they remit money they’ve earned through their hard work here across the US and other borders to help loved ones back home meet daily needs such as rent, food and health care. The World Bank has reported that remittance payments amount to more than $500 billion annually. Remittances from relatives in the US represent an economic lifeline for millions of people living in countries such as Mexico, Honduras or El Salvador.
However, until digital assets were created, the process of remitting money, as managed by banks and other legacy institutions, was inefficient at best and a shakedown at worst:
Legacy payment systems are slow for cross-border payments. Every day counts when you are waiting for money to pay your rent.
When a payment fails, there are often few ways to get the money back. Oftentimes, you’re proverbially SOL.
Intended remittance recipients are often unbanked or underbanked and have issues accessing the money because of the challenges of simply accessing a bank.
Transferring money through the traditional finance system can be very expensive, with fees of up to 10%—and the more underbanked one is, the higher the cost can be. Public reports indicate that 80% of remittances help people pay for food, housing and health care.
Let’s be clear—10% is a poor and working people’s tax imposed by banks and traditional money transmitters. For decades, traditional finance has dominated the system, imposing this tax with little done to actually help consumers—until blockchain-enabled digital assets came along as a hack.
The decentralized, people-to-people nature of cryptocurrencies made it possible for people to send money from their phones directly to their family members without the need of a bank.
The immutability and transparency of the blockchain made settlement on the ground far more straightforward.
And the peer-to-peer nature of the blockchain disrupted the banks’ service as intermediaries, which made the accessing of money less expensive.
Not surprisingly, because it serves people better, remittance through blockchain-run digital assets is growing. A 2021 PYMNTS.com report found that 23% of people who used digital assets to remit money did so to send money internationally. 13% of these folks indicated that they used digital assets as their option of choice to send value across borders. The report noted that “a significant number of consumers (24%) see the option to send funds received as cryptocurrency as a chief motivator in choosing a payment service provider.”
To be sure, more needs to be done to ease conversion of digital assets into the involved fiat currencies on the ground to make web3-based remittances even more accessible. (And this is a fine example of how the federal government could focus on working to “build” solutions that deploy technology to disrupt for people, versus an “enforcement-only” approach that maintains a legacy-dominated status quo where technology is being used to disrupt at people’s expense).
To this point, Coinbase struck a partnership to make it easy for a Mexican recipient to convert the digital asset to the peso quickly and at low cost in accessible locations. Similarly, through its RippleNet initiative, Ripple has leveraged its XRP digital asset to stand up a global network of payment providers that makes it possible to send money all over the world.
For progressives, another way to think about all of this is as a global anti-poverty initiative. The less people have to pay to access resources, the more resources they have to support their basic needs. No matter what, though, the ability to send money earned through hard work in America directly to a loved one outside America so as to help feed families, without having to pay tribute to a bank, is the very definition of a kitchen-table issue.
Nationally, Latino voters represent more than 14% of all voters—and an even higher share of potential voters in certain states that will have an outsized role in determining control of the Senate and presidency in 2024, including Arizona (24% of eligible voters), Nevada (around 20%), Colorado (17%), and Pennsylvania (approximately 13%).
Campaign pros understand that in competitive elections, where usually just a handful of voters are truly open to either party, the winning side typically comes down to which one does better at turning their voters out. However, as we saw in 2020 when it came to Trump’s performance with rural and working-class Latino voters in states like Florida, Texas and Nevada, within the overall Latino voting bloc (previously assumed to be safely Democratic), emerging sub-sectors of Latino voters are truly open to either party in 2022. A recent Axios-Ipsos Latino poll found nearly one in four Latino voters remain undecided.
While overall, they still favor Democrats, the emergence (or at least awareness) that there are persuadable Latino voters is especially important to Democrats because Republicans’ ability to shave traditional Democratic margins among these voters could make the electoral math for Democrats exceptionally challenging—and compound the structural disadvantage they have with the Electoral College in 2024 and beyond.
Democrats and Republicans operatives are now engaged in an intense campaign within the broader campaign of qualitative and quantitative research, including deploying data modeling of voter populations to produce ads and customize outreach to individual sub-ethnic Latino groups so as to identify with precision who these voters are within very narrow demographic bands, and then determine what messages and mediums will be most effective in communicating these messages (for example, campaign ads on Spanish-language media in Florida that used a Cuban accent in Miami and a Puerto Rican accent in Orlando).
Latinos represent about 16% of all Americans, but between one fourth and one fifth of all holders of digital assets—meaning that roughly 10 million Latinos hold a digital asset. While that’s a meaningful share by itself, a spate of research projects on the Web3 Voter also has made clear that Latino voters (and voters of color generally) are overrepresented when it comes to the nearly 20% of all likely voters who own digital assets.
A recent poll of swing states by the pro-web3 super PAC GMI determined that 21% of Latino voters hold a digital asset compared to 15% of white voters. Moreover, the survey found that an astounding 62% of Latino voters either already hold or are considering holding a digital asset, compared to 38% of white voters.
The Morning Consult survey of swing states commissioned by Haun Ventures, which took a deeper look to understand what has motivated Web3 Voters to turn to digital assets, determined that more than 40% of these voters in Nevada, Pennsylvania and Ohio (all states with significant Latino populations) hold digital assets specifically for the ability to remit money across borders. The poll also made clear that a majority of voters (55%), whether they own a digital asset or not, oppose policymakers standing in the way of web3.
The bottom line: a cohort of Latino voters who are critical to the long-term electoral prospects for Democrats, and who we now know are emerging as persuadable voters, are many of the same voters who use digital assets to help loved ones back home cover the costs of food, housing and health care. And, they will hold those who stand with the traditional banks accountable at the ballot box.
This case study illuminates why Gary Gensler’s solo show of opposition to web3 represents bad policy translating into bad politics for Democrats. While it is certainly true that most of these voters have never heard of Gensler, it wouldn’t be too tough for Republicans come 2024 to take his opposition to web3 and paint the Biden Administration—and Democrats across the ballot—with this bad policy position.
Voters are communicating via these polls that web3 policy matters to them.
Many in the Democratic party in fact are listening and leading. The Biden White House’s executive order has made clear that for global competitiveness the US needs to embrace the innovation of web3 with an approach that balances responsibility and innovation. Top Democrats in the Senate and House have proposed major legislation that would confer a lot more authority to the Commodity Futures Trading Commission, as opposed to the SEC, when it comes to regulatory responsibility for web3. And just last week, Colorado’s Democratic Sen. John Hickenlooper, in a public letter, chastised Gensler for his enforcement-only approach to web3.
The old saying that good policy translates into good politics couldn’t be more true than in the case of web3 policy and the politics of the web3 voter.
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