WBD588 Audio Transcription
Can Bitcoin Bridge the Political Divide? With Ted Cruz
Release date: Friday 2nd December
Note: the following is a transcription of my interview with Ted Cruz. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
Ted Cruz is a serving US Senator for Texas. In this interview, we discuss the importance of Bitcoin for Texas and the United States, communicating the threat of CBDCs, the political and regulatory challenges, and Bitcoin’s symbiotic relationship with energy.
“I am an enthusiastic fan of Bitcoin and I want to say to everyone here thank you for what you’re doing to drive the Texas economy, to drive the American economy, to modernise energy, to strengthen resiliency of the grid, to enhance economic freedom.”
— Ted Cruz
Interview Transcription
Peter McCormack: Hello, everyone. Hello, Senator Cruz.
Ted Cruz: Good to see you.
Peter McCormack: What are you doing at a Bitcoin Conference?
Ted Cruz: I'm thrilled to be back. I was here last year and I'm thrilled to be back for number two. I am an enthusiastic fan of Bitcoin and I want to say to everyone here, thank you for what you're doing to drive the Texas economy, to drive the American economy, to modernise energy, to strengthen resiliency of the grid, to enhance economic freedom. I think the men and women here are incredibly important to the future of the State of Texas.
Peter McCormack: Well, you can probably tell from my accent, I'm not from Texas.
Ted Cruz: It sounds like North Texas!
Peter McCormack: There is a Bedford in Texas, there is. But I come to Texas a lot. This is probably my 50th trip here, I love it, the people are great. I feel always welcome here. But coming from the UK, one of the things I've noticed coming over to the US is that the red team and the blue team don't seem to get on very well.
Ted Cruz: I hadn't noticed.
Peter McCormack: Yeah, we notice it when we come over from the UK. But this is an issue we need you to come together on. This is an issue we don't need you to fight on, we don't need you to be partisan. What can be done about that?
Ted Cruz: Well, listen, it's something I'm worried about because there is a real partisan divide in Washington on Bitcoin and crypto. If you look at the leading sceptics of Bitcoin, they're all from the left. There is no one more sceptical of Bitcoin and crypto than Elizabeth Warren, and Elizabeth Warren right now is driving much of the Democrat agenda in Congress; and I think there is a very real, a clear and present danger of crippling regulation coming from Washington and doing real damage. And I've been leading the effort to try to stop that, but I will tell you, whether it's Elizabeth Warren or Gary Gensler at the SEC, the don't like crypto and they are deeply sceptical and that's I think really dangerous.
Peter McCormack: Well, I also don't like crypto but I'm a huge fan of Bitcoin, and I've also noticed this partisan issue. And one of the great things, I think he might be here, one of my friends, Jason Maier, is currently writing a book called The Progressive Case for Bitcoin. I think this is the most important book about Bitcoin for conservatives, because I think it's a book that can help bridge the divide and help educate progressives on why Bitcoin is important.
Ted Cruz: Look, I hope it works. I will say I look forward to reading the book. What we don't have in Washington in any so-called progressives saying that and so that is an issue. And it's not by accident. Elizabeth Warren doesn't like Bitcoin for the same reason that Communist China doesn't like Bitcoin because they can't control it. It is about power, and so there is an ideological problem here. The reason I like Bitcoin is because government can't control it; and it's why also I very much want Texas to be an oasis for Bitcoin and crypto more generally. I think it is a natural place that combines a frontier love of freedom, an embrace of free enterprise, along with abundant and relatively low-cost energy, and an environment where this state wants this room in three years to be ten times the size of what it is right now.
Peter McCormack: Where I was going to that, I was going to ask, we've got a lot of great people in this room, I'm going to assume most of them are probably more on the red team, but what can we do as a community, as people who work in the media, and what can we all do to try to help bridge this divide; and I include you in that as someone who can cross the aisle?
Ted Cruz: Look, I will say, my sense of the Bitcoin and crypto community is actually that it is not really on the red team or blue team, that many folks are somewhat apolitical and not really engaged; and I worry sometimes that in the Bitcoin world, there's a sense of utopian, "We are inevitable and so we don't need to worry about government because blockchain will conquer the world and conquer the dollar and be the next standard".
How many people here remember Napster? They thought they were inevitable too until they got crushed. And so, there is a very real danger -- look, when China banned Bitcoin, it had devastating effects, and I do think the community doesn't perceive the magnitude of the threat that is there, and there may be a sense of, "Well, it will just go elsewhere". How many folks here have your El Salvadoran passports? There is a real cost to having to go elsewhere and I think it will be tragic to see American politicians drive the Bitcoin community out of the United States. But if you left it up to Elizabeth Warren, if you left it up to Gary Gensler, that's what they would do.
I do think that in my view, I think the Bitcoin community is at a similar point to where the tech community of Silicon Valley was 15 years ago, which is at a fork in the road, where I think tech could have gone in the direction of a libertarian, "Leave me alone", small government, pro-freedom; or they could have done -- they chose the road more travelled of the big government, nanny state, censorship and control approach. I think that has had enormously negative consequences.
I view the Bitcoin community at the same fork in the road and trying to decide. I hope Bitcoin chooses the more libertarian, "Leave us the hell alone and let us be free", because those are the values that I believe in, and I think those are the values that are also beneficial for this incredibly promising and growing industry.
Peter McCormack: Bitcoin's come a long way in the 13 years since Satoshi released the whitepaper, to the point where everybody's heard of it now; you don't go anywhere with anyone not having heard of Bitcoin. You've been very good at outlining the threat of regulation, of it being destroyed, coming from the likes of Elizabeth Warren and Gary Gensler. I'm still going to push on this, I'm more interested in saying, "How do we stop that?" or, "How do you stop that; how do your friends stop that?"
Ted Cruz: So, look, there are very few democrats who are outspoken on this topic. You've got Debbie Stabenow, who's got legislation that is not crazy, and there are debates about whether the SEC or the CFTC should regulate it and how it should regulate. I would characterise myself as still in the listening and learning mode, I have not made a definition decision on that. I will say, you say everyone's heard of Bitcoin. Bismarck famously said, "There are two things you don't want to see being made: a sausage and legislation". That is powerfully true.
You may remember last year, as we were moving the Infrastructure Bill, the Democrats attached an amendment to that Bill that if interpreted broadly, would make almost every person here a broker/dealer regulated; miners, make them broker/dealers, require them to collect information on customers that in many ways would be impossible. And I stood up on the Senate floor, I objected and I introduced an amendment to strip that out, and one of the points I made on the Senate floor, I said, "Listen, I don't think there are five senators that could tell you what the hell a Bitcoin is".
You've got to understand, the median age in that body is about 106. So, one of my colleagues a few years ago referred to the internet as a "system of tubes". So, the idea -- and by the way, when I had my amendment to strip it out, the Democrats objected. So then we even tried a second amendment, that was at least to limit the harm of it, and again that got blocked. And so my view is, of course there should be regulation for anything, any major economic endeavour, there needs to be reasonable regulation, but I think government needs to move slowly and carefully.
I personally am still very much in the process of learning, and I hope I have the wisdom to know what I don't know, and so I am reading books, I'm listening, I'm meeting with people, I'm having dinners, I'm meetings, I'm trying to learn more. But I think as we set up the regulatory regime that is going to govern Bitcoin, and crypto more broadly, we should think carefully and not come in overregulating, because the danger, the damage that could be done I think is significant.
Peter McCormack: So, you're obviously an advocate of Bitcoin, Senator Lummis in Wyoming has been a great advocate of Bitcoin. I'm not aware across the rest of the Republican Party. How is Bitcoin considered; is it generally warmly received?
Ted Cruz: It varies. I would say Cynthia and I are the two leading advocates of Bitcoin. Pat Toomey, who is retiring, so he's on his way out, but he also is interested in the topic. I worked with Pat after my amendment to strip out the Democrats' efforts to regulate Bitcoin; I worked with Pat on a kind of middle-of-the-road effort to mitigate it and Pat was interested in that. But as I said, he's leaving and is being replaced by John Fetterman, who I have no idea what he thinks on it, but I am not encouraged. My suspicion is he's going to echo Elizabeth Warren.
I think the rest of Republicans are generally interested in free market ideas, but don't know a whole lot about it. Look, I'm personally a Bitcoin investor, I have an automatic investment every week, I believe in dollar cost averaging, so every week just automatically I'm buying Bitcoin and holding as part of my portfolio. And you mentioned a minute ago, I know there's a divide between Bitcoin purists and people more broadly in the crypto world; I personally am agnostic on that divide.
Peter McCormack: We all start there!
Ted Cruz: But I will say this. I'm agnostic on that divide from the perspective of an elected representative, but in my own portfolio I only invest in Bitcoin. Part of it is because I don't fully understand the broader world of crypto and so I don't like to invest in things that I don't understand. That doesn't mean that that's the only way to approach it, but that's at least how I'm approaching it.
Peter McCormack: I don't think crypto people understand crypto, but I know the principal bitcoiners understand it very well. And that's very cool to hear you're DCAing. It sounds like you're halfway there to being a maxi! Can we talk about the opposite of Bitcoin; can we talk about CBDCs?
Ted Cruz: Yes.
Peter McCormack: We are seeing various trials around the world. Our new Prime Minister, I'm not sure how long we'll have him for, Rishi Sunak, is a big fan of them, wants to call it Britcoin; we know China is a big fan of CBDCs; we've seen tests that have been done in the US. I think anyone who's a bitcoiner knows that these are a dystopian nightmare and I know you've spoken up against them. I see this as the opposite road of Bitcoin. How do we prevent this control coming?
Ted Cruz: Look, I think it's very dangerous. I've introduced legislation to ban the Fed from introducing a CBDC. That being said, I think the Fed wants to and I think the Biden White House wants them to. That's a very dangerous scenario and you say, "How can we stop it?" If no Democrats are willing to stop it, then Congress can't stop it, because one of the consequences of this election, Republicans won the House but with a very narrow majority, and Chuck Schumer is still the Senate majority leader. So, I don't see any realistic prospect of a Democratic Senate stopping the Fed from issuing a CBDC. And you've got to remember, on the Democrat's side, one of the great appeals to a CBDC is the reason why most of us hate the idea, which is it gives the government the ability to monitor your financial transactions.
Remember, in Biden's what he called "Build Back Better", I call it "Build Back Broke", but you look at that bill they filed, it included within it a requirement that your bank report to the Treasury Department every financial transaction you make over $600. Now, that means every rent payment, every mortgage payment, in many cases every car payment and heck, if we keep going in the direction we're going, it might be every time you fill your tank of gas. I think that's a horrible idea. I don't think the government should be collecting information on every financial transaction you engage in.
One of the great attractions to collectivists on the left of a CBDC is they want the government to be able to know every single thing you're spending money on.
Peter McCormack: Should the government be able to collect any information on financial transactions at any level?
Ted Cruz: Well, look, the existing bank records require, for example, transactions over $10,000 are reported. I think that system has worked.
Peter McCormack: Correct me if I'm wrong; wasn't that started in the 1970s when a car was like $10,000, so with inflation, it's brought in a lot more transactions?
Ted Cruz: It certainly has and I think you could have a reasonable argument in terms of whether that amount should be moved but if it should be moved, it shouldn't be moved down. To be honest, I haven't had an extensive conversation about whether a higher threshold makes sense; I would be open to that conversation but I'd want to hear the pros and cons. What I'm adamant on is a $600 threshold doesn't make sense. That sweeps in the vast majority of financial transactions people engage in of any significance.
I personally am a big believer, when I look at the federal government possessing information, I am adamantly against the federal government spying on law-abiding citizens; I'm adamantly against the federal government violating the 4th Amendment and engaging in unreasonable searches and seizures; and when I look at the IRS, I think the IRS has been an instrument of abuse. I've got a book that just came out a couple of weeks ago, that is called Justice Corrupted: How the Left has Weaponised the Legal System, and there's an entire chapter in it, called The IRS Comes Knocking, about the IRS under Barrack Obama that systematically began targeting people perceived to be his political enemies. The Joe Biden Department of Justice and FBI is doing it even worse.
Personally what I think we should do, I think we should abolish the IRS, I think we should have a simple flat tax.
Peter McCormack: I might move here if you do that!
Ted Cruz: You know we have no income tax in Texas?
Peter McCormack: Yeah, but you have property tax, right?
Ted Cruz: We do.
Peter McCormack: It's kind of swings and roundabouts. Our taxes have gone up in the UK. I just want to stick on the CBDCs for the moment. We saw in Canada this year the threat to democracy, with bank accounts being frozen from what were largely peaceful protests, almost universally peacefully protests. I believe a protest is a fundamental pillar of democracy. That highlights to me what a government can do when they feel under threat.
I think anyone who is a Republican would understand that threat, but perhaps people who would vote for the Democrat Party don't fully understand that is a threat to themselves as well. How do you think it would be best to communicate that to democratic voters?
Ted Cruz: It's a good question. One challenge we have right now in our country is that we're so polarised and we're so tribalised that the two sides are almost living in different universes. The left listens to left-wing media; the right listens to right-wing media. We've gotten to the point where if someone disagrees with you politically, you unfriend them, so you only hear voices that agree with you.
You want to try an experiment one night, turn on the TV and watch Sean Hannity or Tucker Carlson and then watch MSNBC. The shows are so different; the topics aren't the same, the facts aren't the same. We used to have homogenising institutions in our country, things like you would go to church together, you would go to the Rotary Club together, you would know people. If you were a Democrat, you'd know Republicans; if you were a Republican, you'd know Democrats. It's harder to believe someone who disagrees with you is evil and the Devil if your kids are playing together.
Take an example, something Texas has faced very directly, which is the crisis at our southern border, that 5 million people have crossed illegally since Biden became President. It's the worst illegal immigration in the history of our country. If you watch CNN or MSNBC, it doesn't exist. They don't report on it, the facts don't exist, the children being physically and sexually assaulted, they don't exist; the dead bodies abandoned on Texas farms and ranches, they don't exist. And so, when it comes to Bitcoin, I think there's some portion of the Bitcoin community that I think probably view themselves as Bernie-bros and, listen, a lot of folks in Bitcoin are young and young people often are attracted to ideas on the left; that's been true for time immemorial.
I do think some of the folks in the Bitcoin world are discovering, "Hey, wait a second, these guys, socialists, free stuff sounds cool", but they're starting, I hope, to understand that people who believe in government control want the government to be able to control you. So frankly, it's going to be you, it's going to be the folks here. If you're someone who leans left, you're not likely to trust what I have to say. There's such a diminishment of trust across the aisle that it's going to take people in the community saying, "Wait a second, this danger is real" and that means people choosing to vote, to be engaged in politics, to support candidates based on issues, and not just, "Are they wearing a red shirt or blue shirt" and, "What's my jersey? So, I'm with them and never mind where they are on issues that matter to me and my family".
Peter McCormack: Does that not mean it's important for someone like you to then also be crossing the aisle? Here in Texas, we know it's a red state; but here in Austin, there are a lot of Democrats here.
Ted Cruz: Oh, yeah.
Peter McCormack: So, let's try and break that trend. What do you think the Democrats do better than the Republicans?
Ted Cruz: I actually think the strength and weakness of the Democrats in Washington is message discipline. They stand together, they're unified. You look at vote after vote after vote in the Senate and all the Democrats are together. And I don't know how much of it is that they're afraid of Chuck Schumer, I don't know how much of it is that they just believe in centralised authority and so they follow orders; but to give you an example, in the last two years, Biden has made judicial nominees, a number of which are really extreme. Not a single Democrat has voted no on a single judicial nominee from Joe Biden. That's a strength of the Democrat party; it can be very effective in messaging. It's also a weakness.
On the Republican side, a strength and weakness is that we are by and large individualists. We've got a conference that is wildly divergent. In the Senate, we've got Susan Collins and Rand Paul. They agree on almost nothing and they can't stand each other. And so on the Republican side, it's a strength to have individualists, but it's also a weakness because it's like herding cats. We're all over the place and everyone goes and does their own thing. There are a lot of times when I look at the organisation and message discipline of the Democratic side, I wish that the Republican side could have a fraction of that; we rarely do.
I agree with you though also that we need to talk to each other, so you do a terrific podcast, I do a podcast three times a week. It's called Verdict with Ted Cruz. When we launched it, it became number one on the podcast charts worldwide. We've had over 50 million downloads. We get every week more listeners than CNN's morning show. And I'll tell you, I do the podcast to try to talk through issues and give people actual substance of what's going on behind closed doors, behind the scenes. I think that's valuable and I've taken the podcast to a number of college campuses where students will go.
We were at Yale University and 700 students come out. I'd say probably a third of them were left of centre and we had 90 minutes of Q&A and there was disagreement and it was vigorous, but I was very proud of how it played out, that people weren't screaming and protesting and lighting their hair on fire. And after that, I went and got drinks with an orthodox rabbi who works on the campus and he said, "That was the largest gathering of students [he said he had seen] in 20 years have a respectful, cordial conversation about conservative ideas". I think that's important that we ought to talk to each other and hear what the others have to say.
Peter McCormack: I'm sorry to do this to you, I wasn't really asking about the corridors of DC, I meant on policy side. What do you think that the left do better than the right?
Ted Cruz: Not a whole lot.
Peter McCormack: Nothing?
Ted Cruz: Look, if you look at where the Democrat party is right now, there are no moderate Democrats left, and it's a weird dynamic. I've been in the Senate ten years. When I got there, there were differences of opinions among Democrats, there were moderates. What has happened in the last two years is the extremes have been elevated. Elizabeth Warren and Bernie Sanders and AOC are driving the policy agenda.
Look, Joe Biden swore me into office when I was first elected. He was Vice President, everyone in the Senate knows Joe. Joe spent most of his career being more in the centre. I find it bizarre that the Biden White House has gone hard to the left. Part of it is a reaction to Donald Trump and, look, Donald Trump is a polarising figure. I am grateful for many of the policy achievements that we had when he was President, but there's no doubt that he drives the left insane and he takes relish in plunging his thumb in the eye of the left, which I think played a significant catalysing force in radicalising the left.
I would love to see more willingness to sit down in a bipartisan way and work together. Today's Democrat Party in the Senate is not interested in that.
Peter McCormack: Can we carry on for a couple more minutes? Great. That was great, I think we should get back to the important questions: is it football or soccer?!
Ted Cruz: It's football!
Peter McCormack: My God!
Ted Cruz: And by the way, I was at the Texas Alabama game this year, what a heartbreaker. That was a safety, damnit, and that means we won. You can look it up later!
Peter McCormack: I know my football; I'm a 49ers fan. Okay, a couple more questions before we finish off. What has Bitcoin meant for Texas?
Ted Cruz: I think Bitcoin means investment, it means opportunity, it means prosperity, it means financial independence. I also think the rise of Bitcoin mining in Texas has an enormous positive benefit for the resiliency of the grid; that I think of Bitcoin mining in one important respect is essentially like a battery for electricity. As you guys know, storing electricity is incredibly difficult. Our battery technology, we need to go a long way before we can store electricity on a large scale.
Bitcoin mining, the beauty of it is, when you've got substantial investment, as we do in Texas in Bitcoin mining, when you have an extreme weather event, either extreme heat, which is frequent in the state of Texas, or extreme cold, which sometimes happens here, Bitcoin mining can be shut off in a fraction of a second making that electricity immediately available to the grid to heat or cool people's homes, to keep businesses running. That is an enormous reservoir of excess capacity that I think is very beneficial.
I also think the environmental benefits of Bitcoin mining are really significant. You go to West Texas. Out in West Texas, you drill an oil well, when you're producing oil you inevitably get natural gas coming up as well. And if you happen to have a natural gas pipeline there, that's great, you can sell the natural gas and use it productively; but many times where a well is, it's not economically profitable to put in a pipeline because there's not enough natural gas to justify that.
I'm very excited by the entrepreneurs, some of whom are in this room, that are capturing flared gas right now. You go to West Texas, you just see fires lighting the horizon as they're just burning it; not good for the environment. And with Bitcoin mining, you can capture that natural gas that was otherwise being flared, you can use it to generate Bitcoin. That ends up helping the environment, number one, and generating value.
I also think Bitcoin has real value in helping develop renewables and in particular renewables in more distant places. There are a lot of places on Earth where there is a lot of wind or a lot of sun, but they're not electrical transmission lines, and you can't generate electricity without being able to transmit it and put it on the grid. And what Bitcoin mining allows you to do is if you're setting up wind mills or solar panels, to immediately generate economic revenue from the first wind mill, even without the transmission lines to carry it to the grid, which can make it give an economic return to make it profitable to invest in renewable energy sources.
So, I think there are lots of benefit to Texas. I also think Texas, when it comes to energy, look, people think of Texas as, okay, we're the oil and gas capital of the world; that is certainly true. But Texans aren't just good at drilling holes in the ground, Texans are energy entrepreneurs. And as we have a transition to alternative energy sources, I think Texas will lead the way there as well. And I think there's a natural intersection for energy entrepreneurs and the Bitcoin industry, those two are interconnected and are a mutual and symbiotic relationship.
Peter McCormack: I think there's no doubt this Senator understands Bitcoin! I think we could have sat here for a couple of hours, but sadly we have to wrap up. Hopefully you and I can chat another time but, Senator Cruz.
