The Incredible Conceit of the State
Following the crash of cryptocurrency exchange FTX, Senator Bob Menendez (D-New Jersey) declared (“US Lawmakers Call for More Crypto Regulation After FTX Collapse,” Financial Times, November 15, 2022):
This should be a renewed call for Congress to take a serious look at crypto exchanges and lending platforms, many of which engage in risky behaviours, while marketing themselves as safe for consumers.
We could say something similar with much more evidence and theory to back up our claim: “It’s time to take a serious look at government, which engages in risky behaviors while marketing themselves as safe for citizens.” Just think about federal power and the public debt, which increase with every emergency and in between, and very seldom recede.
The naïve conceit expressed by state rulers is not limited to one side of the aisle. The Financial Times continues:
Cynthia Lummis — the Republican senator from Wyoming, who has co-written a bipartisan bill that sketches out a complete regulatory framework for digital assets in the US — described the FTX turbulence as “awful and simultaneously not all that surprising”.
“It’s obvious that Congress needs to regulate digital assets,” she added.
That Sam Bankman-Fried, the entrepreneur who founded and ran FTX, was a big donor to the Democratic Party and allied groups does not make the episode less revealing (“Sam Bankman-Fried’s Fall Cuts Off Big Source of Funds for US Democrats,” Financial Times, November 13, 2022):
Before the fall of Bankman-Fried’s cryptocurrency exchange FTX, the entrepreneur had emerged as the second-largest donor to Democrats after George Soros. …
The entrepreneur was the second-largest donor to Democratic-leaning groups during the latest midterm elections, spending $36mn.
He did hedge his rent-seeking bets, but apparently only with small amounts:
During the 2022 cycle, Bankman-Fried donated $155,000 to rightwing Pacs: the Alabama Conservatives Fund, which backed Republican Alabama Senator-elect Katie Britt, a crypto supporter; and Heartland Resurgence, which backed Senator John Boozman of Arkansas, the top Republican on the Senate agriculture committee that oversees crypto.
That the Senate Committee on Agriculture, Nutrition, and Forestry “oversees” cryptocurrencies is not the less hilarious fact of the story.