The Most Powerful Crypto Bro in Washington Has Very Weird Beliefs

Brian Armstrong has become a familiar face—or should we say pate—in the U.S. Capitol. The 41-year-old billionaire CEO of Coinbase, the nation’s largest cryptocurrency exchange by a country mile, has regularly traveled to Washington since at least 2018 to lobby members of Congress for friendly regulations for his industry. He was back on the Hill in June, donning a slim black suit—rather than his usual black t-shirt and black slacks—for a 48-hour bipartisan blitz. And it’s safe to say that he has never been more popular there.

That’s not because senators and representatives are suddenly scooping up Bitcoins and meme coins and NFTs in some ill-advised bid to diversify their investment portfolios; just two members of Congress reportedly bought cryptocurrencies in 2022 and 2023. But politicians do see dollar signs when someone like Armstrong rolls into town because Washington is suddenly awash in crypto cash. Almost overnight, the industry has become a dominant force in American politics.

The numbers boggle: A Public Citizen study last month found that crypto companies, which contributed less than $10 million to super PACs over the past two election cycles combined, have raised more than $200 million in 2024—accounting for nearly half of all corporate contributions this cycle. Most of that money has flowed into pro-crypto Fairshake, the largest corporate-backed super PAC in this election cycle (and the second-largest overall, after a pro-Trump PAC); as of Friday, Fairshake had spent $120 million on U.S. House and Senate races this year, according to an analysis by Sludge.

Notably, Armstrong’s Coinbase accounts for nearly a quarter of Fairshake’s coffers, which might explain his baller smirk here:

But don’t be fooled by his bipartisan platitudes; Armstrong is not just another tech CEO making the rounds in Washington, seeking a few regulatory advantages. While pitching crypto as a tool for economic opportunity to the rubes in Congress, he harbors radical ideas about crypto’s true purpose. He believes the United States is in “slow decline” and embraces the Network State, a cultish tech movement that ultimately seeks to end countries as we know them—to decentralize governance in the same way that crypto seeks to decentralize finance.

“I do think crypto has implications far beyond just payments and money,” Armstrong said during a podcast interview in August, when asked about crypto’s relationship to the Network State. He said that he’s “definitely very interested” in special economic zones—in which typically cash-strapped countries cede land to tech bros who want to play a real-life version of SimCity—and other “ways that you can tokenize real estate and actual physical land to create better forms of society.”

“We’re actually losing freedoms,” added Armstrong, who has an estimated net worth of $8.4 billion. “So I would like us to all in crypto think about how we actually go create physical places in the world to preserve freedom over the long term. I think that’s ultimately crypto’s destiny.”

In a chat earlier this month with Balaji Srinivasan (more on him later) at the annual Network State conference in Singapore, Armstrong was even more explicit. “I also believe in exit,” Armstrong said, with “exit” meaning the process by which a person abandons existing nations for network states. “We need to start developing those backup options.”

It’s hard to imagine any other American CEO openly discussing plans to undermine the U.S. government and start their own country. Even more unimaginably, politicians across the spectrum are openly embracing Armstrong and the scammy, crime-fueling, environmentally destructive industry he represents. Indeed, no matter who wins the presidential election this fall, he will have a friend in the White House.

When it comes to personal investing, cryptocurrencies are casinos at best and Ponzi schemes at worst: The FBI’s latest Cryptocurrency Fraud Report estimates that crypto scammers stole $5.6 billion from Americans in 2023. The most famous crypto scammer of all time, of course, is Sam Bankman-Fried, who alone stole $8 billion from customers of his now-defunct crypto exchange, FTX. Federal authorities say he illegally poured $100 million of those funds into political campaigns before his 2022 arrest. He’s now serving a quarter-century in prison.

But this only scratches the surface of the damage wrought by cryptocurrencies. Chainalysis, a blockchain analysis firm, in February tallied the illicit flow of $24.2 billion in cryptocurrency worldwide in 2023, the majority occurring in sanctioned “entities and jurisdictions.” Translation: Terrorist groups like Hezbollah and pariah nations like North Korea are big fans of crypto. Pyongyang’s crypto scammers have stolen over $3 billion since 2017. “[M]ost experts agree the North Korean government is using these stolen assets to fund its nuclear weapons programs,” Chainalysis told CNBC. Meanwhile in Russia, where crypto is banned, Vladimir Putin has embraced its limited use in an effort to evade international sanctions.

The industry is also a plague on the environment. Cryptocurrencies famously burn through massive amounts of energy, thus driving up greenhouse gas emissions: A 2022 White House report warned that crypto’s use of dirty energy could “hinder the ability of the United States” to meet its Paris Agreement commitments and “to avoid the most severe impacts of climate change.” But the industry also devours water, which is used in cooling systems in crypto data centers; a study last year found that a single Bitcoin transaction can use enough water to fill a small swimming pool.

Despite this parade of red flags, Congress remains hesitant to crack down—though a few Democratic senators have tried.

“Crypto plays a role at every stage in the illicit fentanyl trade,” said Sen. Elizabeth Warren, Washington’s most vocal crypto critic, during a hearing in January. “The drug cartels and the traffickers sell their deadly drugs in the darkest marketplaces, and they get paid in crypto.” She’s right. And yet, fierce crypto lobbying has so far scuttled her Digital Asset Anti-Money Laundering Act, which the industry claims will stifle innovation—an argument that succeeded in getting the bill’s top Republican co-sponsor, Senator Roger Marshall of Kansas, to withdraw support.

Pro-crypto legislation has fared better. In May, in a bipartisan 279-136 vote, the House passed the Financial Innovation and Technology for the 21st Century Act, which would legitimize crypto while defanging its hated nemesis, the Securities and Exchange Commission. SEC chairman Gary Gensler warned that the bill “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.”

The legislation faces tougher odds—for now—in the Democratic-controlled Senate, where crypto critic Sen. Sherrod Brown of Ohio helms the Senate Banking Committee. No wonder, then, that crypto PACs have spent $40 million against Brown’s re-election bid. Whether Brown will survive the onslaught is unclear—he leads slightly in polls—but either way, Republicans are projected to win control of the chamber this fall. If they also hold the House and win the presidency, there will be no guardrails left. Crypto will have the run of the Capitol.

Armstrong put it succinctly, and perhaps accurately, during a Bloomberg TV interview earlier this year: “Being anti-crypto is political suicide.”

When it comes to swaying voters, that may or may not be true. Fewer than 17 percent of Americans have ever used crypto, according to polling by the Pew Research Center, and 75 percent of those who have heard of crypto don’t trust it. According to a May report from the Fed, just 7 percent of Americans hold cryptocurrencies. That said, there are undoubtedly single-issue crypto voters—though in unknown numbers.

But is it suicide to oppose crypto because the industry will pour money into your opponent’s campaign? Quite possibly.

That might explain why Donald Trump, who once called Bitcoin “a scam against the dollar,” changed his tune this year. “If you’re in favor of crypto,” he declared in May, “you better vote for Trump.” By July, he was promising to turn the U.S. into the “crypto capital of the planet” and suggesting that a “little crypto check” could erase the nation’s $35 trillion national debt. And in mid-September, amid a historically tight presidential race, the convicted fraudster nonetheless made time to launch his family’s new crypto business, World Liberty Financial—while remaining comically vague on the subject. “Crypto is one of those things we have to do,” wrote Trump on X. “Whether we like it or not, I have to do it.”

Top Democrats sound similarly obtuse. “We all believe in the future of crypto,” said Senate Majority Leader Chuck Schumer on a recent “Crypto4Harris” fundraising call, promising swift action on crypto legislation. (Earlier that day, the Fairshake PAC had donated $3 million apiece to Elissa Slotkin and Ruben Gallego, two pro-crypto Democrats running for Senate.) In campaigning for president, Kamala Harris has broken with Joe Biden—a crypto skeptic—and called for a “reset” with the industry. In an economic policy document released by her campaign on Thursday, Harris said she would “encourage innovative technologies like AI and digital assets,” and Semafor reported the same day that Harris is “already dispatching aides to court well-heeled crypto investors and their Democratic allies in Congress.”

With crypto pointing a $200 million gun at their heads, it makes sense that Democrats would seek détente. Yet it’s not clear whether they grasp the inherently extremist politics of crypto, with its seditious fantasies of sovereignty. In The Politics of Bitcoin: Software as Right-Wing Extremism, David Golumbia outlined how crypto projects like Bitcoin are rooted in right-wing ideas. For example, Bitcoiners largely accept the “pillar of extremist thought” that “government is inherently evil,” thus necessitating a shift to secretive digital currency. Golumbia further exposed how pro-crypto arguments often echo far-right conspiracy theories depicting the Federal Reserve as a nefarious force bent on world domination. This explains why so many crypto enthusiasts end up sounding like right-wing crackpots.

There is no better example than Balaji Srinivasan, who served as chief technology officer of Coinbase from 2018-2019. In April, I wrote for TNR about his techno-authoritarian ideas for San Francisco, where he envisions the rise of a tech-aligned “gray tribe” that would expel Democrats. Srinivasan also describes the U.S. as a collapsing nation and preaches the need for tech plutocrats to create privately owned crypto countries. He suggests crypto can shift the global political order by chiseling away at the power of government-issued currencies.

“Bitcoin, if it wins, completely changes the world, because it changes the ability of centralized states to do what they’ve been doing,” he said.

Srinivasan is the leading evangelist of the Network State, which he defines as “a highly aligned online community with a capacity for collective action that crowdfunds territory around the world and eventually gains diplomatic recognition from pre-existing states.” But the subtitle of his 2022 book on the subject provides the most succinct definition: “How to Start Your Own Country.”

Armstrong is a fan of his former employee, whom he has called a “genius” and in the “top three smartest people I’ve ever met.” Last year, he invested in the Balaji Fund, which supports Network State projects worldwide. And he blurbed Srinivasan’s book, writing “Balaji is a visionary, and one of the most original thinkers of our time. Many have had the experience of hearing him say something, thinking it was crazy, and then a year or two later realizing ‘Balaji was right.’ I think Balaji will be right about The Network State.”

Let that sink in a moment—it’s not unlike how some people talk about Trump. But the truth is that things Trump says are still crazy, and that’s true of Srinivasan, too. At the recent Network State conference, which he organized, Srinivasan said the Fed is trying to kill people financially: “Bitcoin is about stopping the state from slowly draining your wealth … The Fed, they want you dead, just a little bit every year.”

But in some ways, Armstrong cuts a more frightening figure in that he’s gullible—but also insanely wealthy and increasingly influential in Washington.

“You certainly were a pioneer here,” Armstrong told Srinivasan in their chat at the conference, “and I’ve come to believe more and more in this vision that you have, and I’ve started to see it happen.” He agreed with Srinivasan’s suggestion that passports could someday be issued by tech companies rather than governments, then added, “Crypto and Bitcoin really unbundled money from the state, and so we’re seeing that next layer get unbundled from the state, which is identity. It does seem kind of antiquated in a way that the form of identity we have today is, like, a piece of paper that the government printed.”

These aren’t just the daydreams of Silicon Valley dilettantes. They are attempting to put these ideas into practice.

Multiple projects are underway. Próspera, a private tech city in Honduras, markets itself as a libertarian paradise with low taxes and pro-Bitcoin policies. Located in a special economic zone on the Caribbean island of Roatán, it has become a hot destination for biohackers seeking experimental gene therapies and medical treatments (or simply to get a Tesla key implanted in their hand, as The New York Times Magazine reported in a recent feature story on the project). But the wannabe tech utopia has struggled since its establishment in 2020. It came into conflict with locals, who were put off by the development’s armed guards and worried that the company might try to take more land, and eventually faced a national backlash in a country where the average worker makes a few hundred dollars a month.

The special zones that made it possible, known as ZEDEs in Spanish, were created during a period of political corruption and turmoil following a 2009 military coup that ousted left-leaning President Manuel Zelaya. In 2022, the Honduran legislature, at the urging of President Xiomara Castro (wife of the president ousted in the coup), repealed the ZEDE laws. Last month, the Honduran Supreme Court declared the zones unconstitutional. But Próspera is fighting back: The company has filed a $10.7 billion lawsuit against the Honduran government.

The guy with the Tesla chip in his hand is Patri Friedman, a grandson of the economist Milton Friedman the founder of Pronomos Capital, one of Próspera’s funders.The company, backed by tech billionaires Peter Thiel and Marc Andreessen (and advised by Srinivasan), says it is funding similar projects around the globe, including in Africa and Asia. The basic idea: Work with governments to create regulation-free, privately-owned territories that, over time, will negotiate for full sovereignty (or file massive lawsuits against their host governments, if the experience of Honduras is any indication).

Meanwhile, it’s not clear that politicians in Washington, who are among the least tech-savvy people in America, have any clue about this Network State movement—let alone the underlying goals it shares with the crypto industry. Most of them probably don’t even get how crypto works. I hate to admit it, but Peter Thiel was right when he said in a 1999 speech predicting the rise of crypto politics, “The people in D.C. are completely backwards, they don’t understand any of the technology and—even to the extent they can—it can’t be stopped.”

Of course, ignorance of an industry never prevented members of Congress from doing its bidding. In a matter of months, crypto has proven that it’s powerful enough to buy politicians’ positions—either directly, through generous campaign contributions, or indirectly, by threatening to fund their opponents. It truly can’t be stopped, it seems.

Nor will Coinbase’s Armstrong—who declined to comment for this article—and his cohort be satisfied once they have successfully bullied Congress into letting their industry do as it pleases without government interference. Crypto, after all, is just the gateway drug. Once politicians are hooked on it—which, this election season suggests, is already true—the crypto bros will get even more bold about pushing their more dangerous ideas: namely, the end of nation-states as we know them.

Praxis, a company funded by Andreessen, Srinivasan, and Thiel, along with OpenAI’s Sam Altman and Palantir’s Joe Lonsdale, is planning to build a tech-governed “cryptostate” in the Mediterranean. On September 18, it published a manifesto titled The Network State: Crypto’s End Game, which states, “As local communities dissolve and Nation States stumble, Network States will ascend. The next global superpower will be a Network State.”

The success of this plan necessarily requires the erosion of American democracy, if not its outright fall. Perhaps that’s why Trump himself is open to it: His official campaign platform contains a plan for so-called “Freedom Cities,” new settlements on federal land that seem to fit the Network State framework. No doubt, Trump is already thinking about how to profit from it.

Armstrong certainly is. At the Network State conference, he stressed the need to create “an archipelago” of these network states to serve as “refuge where the builders of the world can make sure they have a place to reside.” When asked to share a final thought with the audience, he didn’t miss a beat: “If you’re building network states, build them with Coinbase.”