Cryptocurrency can move money fast, quietly, and across borders. That speed and opacity help explain how crypto enables political corruption, according to legal scholars and watchdogs. Tokens and stablecoins can mask gifts to officials, blur quid pro quo deals, and weaken guardrails. Here is what’s going wrong—and five steps to fix it. The promise of crypto was open, borderless finance. The reality is more mixed. Yes, the tech runs on public ledgers. But in practice, wallets hide true owners, offshore entities shield flows, and tokens act like unregulated stocks. This gray zone has collided with narrow court rulings on bribery, which already make it harder to prove quid pro quo. Put together, these trends show how crypto enables political corruption by making influence money easier to give, to hide, and to spend. Below, I explain the main weak points and lay out five fixes that reinforce honest government without slowing useful innovation.

How crypto enables political corruption

The law now asks for impossible proof

Recent Supreme Court rulings narrowed what counts as an “official act” in federal bribery law. Prosecutors cannot just show a gift and a favorable outcome. They must show a tight link: this gift for that act. That is hard. Crypto makes it even harder by splitting “gift” and “outcome” into many small, hard-to-trace steps.

Meme coins turn loyalty into money

Meme coins are tokens attached to a figure, cause, or joke. Think of them like digital trading cards. Supporters buy, hype, and trade them. Price spikes early, then often sinks. For a public figure, a meme coin can act like a cash funnel dressed up as fandom. Donors can buy big, signal loyalty privately, and leave little that looks like a direct payoff. This is one way how crypto enables political corruption: it converts political enthusiasm into opaque personal revenue.

Stablecoins act like shadow banks

Stablecoins promise $1 in reserve for every $1 coin. When run honestly, they cut volatility and allow quick conversion to dollars. But they also serve as quiet pipes for large transfers. A donor can move stablecoins through layers of wallets and offshore platforms and deliver value that looks more like “cash” than a risky token. If an official issues, promotes, or benefits from a linked stablecoin, they can skim the “float” on huge third-party transactions that never name them. Again, the money flows; the quid pro quo stays blurry.

Exchanges and mixers blur the trail

Crypto exchanges and mixing tools can hide sources and break the chain of custody. U.S. authorities have prosecuted platforms for anti–money laundering failures, including the founder of Binance, who received a prison sentence after pleading guilty. When gatekeepers look away, bad actors move funds for fraud, sanctions evasion, or terrorism. The same pathways can carry political money to officials with minimal risk of detection.

Publicity masks intent

Much of this activity happens out in the open—token launches, livestreams, branded coins. That publicity can confuse the public harm. Supporters can say, “This is just merch” or “just a community token.” Meanwhile, the money is real, the disclosure thin, and the incentives misaligned. This softens norms against influence cash and shows future politicians a playbook.

Five ways to stop the slide

1) Treat most tokens as securities and enforce the rules

Call things what they are. If a token is sold on the promise of profit driven by others’ efforts, it meets the classic test of a security.

Direct the SEC to treat tradable crypto tokens as “crypto securities.”

Require issuer registration, audited disclosures, and insider-trading limits.

Criminalize deceptive promotion and market manipulation, as with penny stocks.

This will make meme-coin pump-and-dumps far riskier for insiders and promoters, closing one channel of influence cash.

2) Create a targeted federal crypto-fraud statute

General fraud laws were built for mail, wire, and bank schemes. Crypto has new tricks.

Write a statute that bans wash trading, spoofing, selective airdrops to officials, and undisclosed “token payoffs.”

Embed rules for mixers, privacy tools, and cross-chain bridges used to hide consideration.

Fund specialized crypto-forensics teams and fast-track subpoenas for wallet attribution.

Clear language will help courts act and deter future abuse.

3) Regulate stablecoins like banks

Stablecoins take deposits by another name. They should meet bank-grade safeguards.

Require licenses, full-reserve custody in U.S. Treasuries, and daily third-party attestations.

Mandate on-demand redemption, liquidity stress tests, and continuous supervision by the Fed.

Stand up an insurance backstop funded by issuer premiums.

Demand U.S. domicile and board-level accountability to stop “jurisdiction shopping.”

This reduces run risk and narrows their use as stealth payoff pipes.

4) Fix the corruption law gaps and upgrade disclosures

Congress should restore common sense to public-integrity rules.

Overturn or narrow the parts of McDonnell that exclude “setting up meetings” and similar actions from “official acts.”

Ban gifts and gratuities both before and after actions, with clear dollar thresholds and timing windows.

Prohibit public officials from issuing personal tokens or accepting crypto from unidentified wallets.

Require near–real time disclosure of digital assets, wallets, and any token-related revenues by officials and their immediate families.

Better rules will shrink the gray zone where crypto thrives as influence money.

5) Solve the real payment problems that crypto exploits

Some defenders point to high remittance fees or slow bank transfers. Fix those directly.

Expand FedNow and RTP access so small banks and credit unions can offer instant payments.

Cap remittance fees on small-dollar transfers and promote transparent, low-cost cross-border corridors.

Support open banking standards so consumers can move money faster and cheaper.

When legal, safe rails are affordable, fewer people will turn to stablecoins and offshore platforms.

What to watch: Red flags for citizens and institutions

Signals of undue influence

An official launches or endorses a personal meme coin.

Family-linked entities suddenly profit from token sales or stablecoin “float.”

Policy shifts follow large on-chain flows to aligned wallets or PACs.

Frequent use of mixers, privacy coins, or new wallets near key decisions.

Selective pardons or enforcement pullbacks that benefit crypto insiders.

Steps organizations can take now

Newsrooms: build crypto-forensics capacity and partner with on-chain analysts.

Compliance teams: add wallet-screening and token-gift rules to ethics policies.

State ethics boards: require disclosure of wallets and bar anonymous crypto gifts.

Investors: avoid tokens tied to public officials; assume enforcement will eventually arrive.

These actions raise the cost of abuse and support honest players in the market. The bottom line is simple. We do not need to ban the technology. We do need to close the legal and policy gaps that make crypto an easy vehicle for influence money. With clear securities rules, a modern crypto-fraud law, bank-grade oversight for stablecoins, stronger public-integrity statutes, and better payment rails, we can keep the good and starve the bad. Crypto is not the first tool to tempt the powerful. But it may be the fastest. The best way to slow it is to make the paths for honest use simple and the paths for corrupt use steep and risky. Strong rules, steady enforcement, and basic transparency can blunt how crypto enables political corruption—and rebuild trust where it has frayed.

(Source: https://www.theatlantic.com/podcasts/2025/12/the-david-frum-show-will-thomas-crypto/685296/)

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