Decoding the Competition of Ruling Class Interests in Regard to Crypto Regulation 

The evolving relationship between cryptocurrency markets, traditional financial power structures, and government regulation represents a complex negotiation between competing factions of the American ruling class. As cryptocurrency has matured from a fringe technology into a significant financial force, it has become a battleground for power between Silicon Valley elites, traditional banking interests, and government regulators. This analysis examines how “dollarized crypto” represents a compromise between competing power centers, explores the dollar’s weakening global position, and reveals why certain political factions remain opposed to cryptocurrency’s expansion.

•Silicon Valley’s Political Pivot and the Crypto Incentive

The relationship between Silicon Valley elites and cryptocurrency reveals the primacy of class interests in determining political alignments. Tech leaders have demonstrated a growing willingness to align with right-wing political forces, with cryptocurrency regulation emerging as a central motivating factor.

The tech leadership’s political stance can be clearly traced to class interest, particularly as cryptocurrency has developed into “a vast engine of speculation and wealth”. Biden administration regulatory efforts have provided a powerful incentive for capital elites to prioritize profit over other considerations. This connection between crypto investments and political alignment is not coincidental but strategic.

Tech industry figures revealed their endorsements of Trump collectively in July 2024, with venture capitalist Peter Thiel and Elon Musk serving as figureheads for this shift. The selection of J.D. Vance as Trump’s running mate reinforced this trend, as Vance is “considered a major ally of cryptocurrency” and previously drafted legislation to limit SEC oversight of the sector.

•The Massive Political Influence Operation

The crypto industry has deployed enormous financial

resources to reshape regulation in its favor, demonstrating the raw power of capital in influencing policy. The Fairshake super PAC alone has raised approximately $160 million, making it “the eighth-largest super PAC for expenditures and the fourth-largest for total fundraising”. Major donors include Coinbase, Ripple, and venture capital firm Andreessen Horowitz(a16z).

This political influence operation works across party lines, with Fairshake channeling money to both conservative and liberal PACs through intermediaries called Defend American Jobs and Protect Progress. This strategic approach allows crypto interests to influence both parties while obscuring their financial connections—a sophisticated approach to policy capture.

The crypto lobby has spent approximately $13 million on lobbying in just the first half of the year (2024), demonstrating the industry’s determination to shape policy outcomes. This financial firepower represents a concerted effort to establish favorable regulatory conditions that would benefit wealthy crypto holders at the expense of stricter oversight.

•Dollarized Crypto: A Class Compromise for Continued Dollar Hegemony

The emergence of “dollarized crypto” (particularly USD-backed stablecoins) represents not a revolution in financial systems but a compromise that allows Silicon Valley elites to participate in financial innovation while preserving the fundamental power of the dollar-based system.

•The Dollar’s Weakening Position

Evidence suggests the dollar’s global dominance faces increasing challenges. Since February 5, 2025, the US Dollar Index has dropped 2.79% to 104.258, continuing a trend of relative weakness. This decline coincides with statements from US Treasury Secretary Scott Bessent expressing “his vision to reduce US interest rates”.

The weakening dollar creates opportunities for alternative stores of value, including cryptocurrency. When the dollar weakens, “investors often seek alternatives, such as crypto assets, to protect their wealth”. This pattern has historical precedent: during the COVID-19 pandemic, stimulus measures and rate cuts led to a weaker dollar, and Bitcoin surged from $5,000 in March 2020 to over $60,000 by April 2021.

•How Crypto Can Reinforce Dollar Dominance

While seemingly counterintuitive, the promotion of dollar-backed stablecoins could actually reinforce American financial hegemony by creating new channels for dollar circulation even as traditional mechanisms face challenges. The compromise implicit in “dollarized crypto” allows Silicon Valley elites to profit from the crypto boom while ensuring these innovations ultimately strengthen rather than undermine the dollar-based financial system.

This strategy is visible in the political positioning around cryptocurrency. The Trump administration has promised to make the US the “crypto capital of the world,” indicating a recognition of cryptocurrency’s potential utility for American financial power. Meanwhile, the Biden Treasury Department’s “DeFi Broker Rule” was characterized by opponents as threatening to “cripple American digital asset leadership, stifle innovation, and burden American entrepreneurs”.

•The Regulatory Battle as Class Conflict

The intense battle over cryptocurrency regulation reveals competing interests within the American ruling class, with different factions vying for control over the future financial system.

•The Anti-Regulation Faction

Silicon Valley elites and crypto investors have aligned to oppose robust regulation of the sector. The Biden administration’s “DeFi Broker Rule” would have required those participating in decentralized finance exchanges to satisfy reporting requirements, including collecting taxpayer information. This rule was aggressively opposed by the crypto industry and ultimately repealed by Congress with bipartisan support, including 76 Democrats who broke with their party leadership.

Former IRS Commissioner Charles Rettig expressed concern that these regulations would “overwhelm the agency and have little or no value to effective and efficient tax administration”. This statement reflects the complexity of applying traditional regulatory frameworks to decentralized systems.

•The Pro-Regulation Faction

Within the Democratic Party, figures like Representative Brad Sherman have advocated for stronger crypto regulation. Sherman urged Vice President Harris to maintain a skeptical stance toward crypto, arguing this position would be consistent with “enforcing our income tax laws, our sanctions laws, our human trafficking laws”. This faction views cryptocurrency primarily as a vehicle for evading regulation and financial oversight.

The SEC under Gary Gensler has been particularly active in regulating cryptocurrency, “bringing dozens of enforcement actions against crypto firms, charging them with everything from unregistered securities trading to operating full-fledged pyramid and Ponzi schemes”. Gensler has attempted to force crypto exchanges to register as trading platforms with the SEC, which would impose stricter oversight.

•Why Some Politicians Remain Opposed to Crypto

The opposition to cryptocurrency from certain political factions reflects concerns about shifting power dynamics in the financial system and the potential loss of control for established interests.

•Threat to Established Financial Surveillance

Cryptocurrency, particularly in its decentralized forms, potentially undermines government’s ability to monitor and control financial flows. Representative Sherman’s linking of crypto regulation to enforcing sanctions and anti-trafficking laws indicates concern about cryptocurrency enabling activities outside government oversight.

The Biden administration’s “DeFi Broker Rule” would have created “8 billion new pieces of paperwork for taxpayers to submit to the agency and for IRS employees to collect and analyze”. This massive expansion of reporting requirements suggests an attempt to maintain visibility into financial transactions that might otherwise occur outside traditional systems.

•Protecting Traditional Banking Interests

Opposition to cryptocurrency may also reflect the interests of traditional banking institutions that face potential disruption from crypto innovation. While not explicitly stated in the search results, the historical alignment between financial regulators and established banking interests suggests this dimension may be significant.

The regulatory framework proposed by the SEC would “make the space less of the wild casino that it presently is”. This approach would potentially reduce profits for crypto speculators while bringing the sector under regulatory structures that favor established financial institutions.

•The Internal Democratic Party Struggle

The Democratic Party faces significant internal division over cryptocurrency policy, revealing how this issue cuts across traditional political alignments.

Senator Debbie Stabenow, chair of the Agriculture Committee, supports transferring more crypto authority to the Commodity Futures Trading Commission—a move “largely seen as friendly to the industry”. Representative Wiley Nickel emphasized that “it’s important to reset” Democrats’ relationship with the crypto industry.

This split within the Democratic Party demonstrates how cryptocurrency has disrupted traditional political coalitions. Crypto-friendly Democrats warn against “ceding the still-growing technology to the GOP,” while progressives characterize “the crypto industry as tantamount to institutionalized snake oil”.