Crypto’s Big Bet: How the Industry is Buying Influence in the 2024 Election
The 2024 US election is shaping up to be a battleground for a new breed of political influence: the cryptocurrency industry. While the traditional giants of finance and technology have long flexed their muscles in the political arena, crypto companies are now wielding their newfound wealth to secure a place at the table. Flush after a recent price surge and facing a regulatory landscape they see as hostile, crypto businesses are pouring millions into influencing the outcome of the election, with their sights set on shaping the future of digital assets in the US.
The Rise of the “Crypto Guy”
Jonathan Padilla, a self-proclaimed “crypto guy” and founder of crypto marketing company Snickerdoodle Labs, embodies the industry’s growing political presence. Padilla, who previously worked at PayPal as a blockchain specialist, has been making the rounds at political events, speaking with anyone who will listen about crypto policy. He’s even managed to snag a selfie with Senator Chris Coons, a sign of the industry’s growing influence within both Democrat and Republican circles.
Padilla is not alone. His efforts are fueled by the burgeoning Crypto4Harris coalition, a group of Democrat-supporting crypto industry members seeking to secure favorable legislation for digital assets. The group is making its presence felt, hosting virtual town halls with prominent Democrats like Senate Majority Leader Chuck Schumer, who has openly expressed his belief in the future of crypto.
A Sea Change in Political Attitudes
This increased engagement reflects a significant shift in political attitudes towards cryptocurrency. While the industry was once viewed as a niche interest, it now commands the attention of politicians who recognize the growing number of voters motivated by crypto investments.
“The industry believes this election is existential,” notes Veronica McGregor, chief legal officer at crypto wallet company Exodus. “No matter who gets into office, changes need to happen for our industry to thrive like it should.”
Fueling this urgency is the hefty financial contribution being made by crypto companies. According to an analysis by the consumer advocacy nonprofit Public Citizen, crypto businesses account for 48 percent of all corporate contributions to this election cycle, an “unprecedented” level of spending.
Super PACs: The Gateway to Influence
The majority of this spending is funneled through a network of affiliated Super Political Action Committees (Super PACs) like Fairshake, Protect Progress, and Defend American Jobs. Super PACs, unlike traditional political action committees, can raise and spend unlimited amounts of money to support or oppose candidates, as long as they do not coordinate directly with the campaigns.
These crypto-affiliated Super PACs are designed to influence the election by promoting candidates who are sympathetic to the industry’s agenda. This agenda includes securing favorable legislation that would:
- Clarify the regulatory classification of digital assets: The lack of clear regulatory frameworks has created a complex legal environment for crypto firms, with uncertainty about which regulatory rules should apply.
- Protect the industry from adverse regulations: Companies like Coinbase and Binance have faced legal challenges and lawsuits from US financial regulators, which they perceive as unfair and restrictive.
- Foster a more favorable regulatory landscape: Crypto firms are hoping to establish a more welcoming environment for digital asset development and adoption through pro-crypto legislation.
The Power Players: Coinbase and Beyond
The largest of these Super PACs, Fairshake, has raised over $200 million, eclipsing other Super PACs, both crypto-specific and otherwise. Major donors include crypto businesses such as Coinbase and Ripple, pro-crypto venture capital firm a16z, and an investment firm founded by Cameron and Tyler Winklevoss, the founders of crypto exchange Gemini.
Coinbase, the largest donor to Fairshake with a contribution of $45 million, has come under scrutiny from the Federal Election Commission (FEC). A joint complaint by Public Citizen and software developer Molly White alleges that Coinbase may have violated campaign finance laws by contributing to Fairshake while simultaneously negotiating a contract with the government.
Coinbase has disputed this characterization, claiming that its services are not funded by tax revenue and that it is not a federal contractor. White, however, remains unconvinced: “To us, it looks like Coinbase is trying to find a loophole that doesn’t really exist.”
A New Era of Political Influence
The massive influx of crypto funding into the 2024 election has injected a new dimension into the political landscape. It highlights the evolving power dynamics in the US political system, where traditional power players are being challenged by the rapid growth of new industries like cryptocurrency.
This influx of money comes with concerns about transparency, accountability, and potential conflicts of interest. The crypto industry’s heavy spending raises questions about the influence it is able to exert on lawmakers and the potential impact on regulations.
As the industry continues to evolve and its political influence grows, it will be crucial to monitor the impact of its spending on the political process and to ensure that the public interest is prioritized. The 2024 election presents a crucial battleground in this evolving power dynamic, with the future of cryptocurrency in the US potentially hanging in the balance.
