Why Bitcoin Failed

Mark Rizzn Hopkins did 12 months in a low-sec Federal facility for what crime? For selling bitcoin to an undercover agent. At 17 years old Bitcoin is valued at one to two trillion dollars, trades tens of billions a day in world currencies, and a prospective beneficiary of the CLARITY Act, but it’s also a failed political movement. Free trade of cash for crypto is still criminalized and call it what it is, the Bitcoiners failed because the Bitcoiners sold out.

In the 2010s, I was robbed in Argentina on a trip, in a time of capital controls, and like so many Chinese and Nigerians and Argentinos I resorted to Bitcoin. When I sold it to a hardware store owner on the peer-to-peer platform LocalBitcoins, since shut down in 2023, I knew the cash was real, and that Bitcoin was a technology with the power to slice through capital controls. Most of my other American Bitcoiner counterparts never had that experience, they buy and hold. Both ways of using the Bitcoin protocol rely on each other. In order for a refugee to sell bitcoin there must be a buyer who will keep the price healthy. The reason Bitcoin failed as a political movement is the holders’ interest trumped the users’ interest.

The chronology makes the political shift unusually easy to see: in 2013, the Financial Crimes Enforcement Network (FinCEN) ruled that people who merely use Bitcoin are outside money-service-business regulation while people engaged as a business exchanging convertible virtual currency for fiat can become regulated money transmitters, placing legal pressure precisely on the cash bridge that made peer-to-peer Bitcoin useful. In January 2024, the SEC opened the opposite door, approving spot Bitcoin exchange-traded products so Americans could buy regulated financial exposure to Bitcoin without using Bitcoin as money at all.

A few months later, David Bailey, CEO of Bitcoin Magazine, said he had been working with Donald Trump’s campaign on its Bitcoin and crypto policy agenda; Bailey then helped bring Trump to Bitcoin 2024 in Nashville, where the campaign reportedly raised $21 million, largely from “industry and whales/OGs,” before Bailey went on to become a major intermediary between Washington and the Bitcoin industry. In August 2025, meanwhile, Tornado Cash developer Roman Storm was convicted of conspiring to operate an unlicensed money-transmitting business, showing that the old §1960 theory had survived Bitcoin’s political ascent.

Now, in September 2026, after the crypto sector poured more than $190 million into political efforts, the Senate is approaching a decisive CLARITY vote while the bill’s Blockchain Regulatory Certainty Act protections expressly leave §1960(b)(1)(C) available where prosecutors allege specific intent involving criminal proceeds. Crypto lawyer Gabriel Shapiro, @lex_node, summarized the compromise this weekend as one that “expressly and specifically preserves the Roman Storm prosecution theory, unfortunately,” while still predicting major donors would support the broader bill; Shapiro’s post Storm’s response was considerably shorter: “Screw this bill. People want devs in prison.”

Look the Democrats can’t be trusted, some kind of bill needs to pass. If the US Dollar gives way to more inflation, Democrats might even like capital controls and other Argentina-like shenanigans to deal with the new reality, but Americans have a strong First Amendment claim to the right to publish and use private financial software. CLARITY provides the base for self-custody rights, but for Mark Rizzn Hopkins and other American Bitcoiners facing incarceration, it wouldn’t have been enough. The odds of another bill are low, we need one covering peer-to-peer requirements, easier KYC/AML, clear levels of activity without licensing requirements. It would be very difficult to pass after mid-terms.

Coin Center (dating back to Jerry Brito’s 2013 American Banker article), the Cato Institute, and the DeFi Education Fund have long urged regulators to protect self-custody, P2P transactions, and non-custodial software from overreaching §1960 liability. Similar pressures surround industry figures like former NoOnes CEO Ray Youssef, who stepped down amid federal AML prosecutions.

To recap: yes some shadowy super-coders succeeded at making hard money for the internet, it somehow blew up from tens of millions to trillions in value and does daily volumes to rival gold, but along the way we forgot to prioritize enabling the public to trade freely. Regulated institutions protecting the clean profit-taking of long-term holders ruled the day. A few lobbyists and renegades with ankle bracelets tried to stand in the way of this sell-out process, but we mostly failed because we didn’t even really try. Watching the RNC sabotage the Ron Paul primary campaign in 2008 was more effective politics than Bitcoiners arguing on Twitter in 2018. It makes me tear up a little bit.

Perhaps this is the way of all movements, to sell out when the price gets ripe. Bitcoin wouldn’t be the first failed political movement undone by greed and complacency. Peer to peer isn’t going to happen in the United States, but the CLARITY Act’s market benefit can still support trade globally.

Patrick Dugan is an AI Researcher and creator of TradeLayer.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.