Crypto is betting it all on the 2024 elections

It’s probably been a minute since you saw Larry David, Tom Brady, or Matt Damon on TV extolling the benefits of crypto. That’s because the era of feverish crypto hype — interrupted by a cascade of highly publicized scandals — has largely passed since its heyday in 2021.

But there’s one critical place where the industry is hotter than ever: Washington, DC.

Crypto has spent a record $119 million in the 2024 federal elections, magnitudes more than it has ever spent before. This huge number means that crypto accounts for almost half of all corporate political contributions in this cycle. Its spending since 2010, totaling $129 million, puts the industry second only to fossil fuels, according to a report from the progressive consumer advocacy group Public Citizen.

“It’s already 15 percent of all known corporate contributions since the Citizens United ruling,” says Rick Claypool, a research director at Public Citizen who authored the report on crypto election spending, referring to the landmark 2010 Supreme Court decision that opened the floodgates for virtually unlimited corporate spending in elections through outside groups.

Crypto’s ballooning political war chest and voracious appetite to dangle money in front of lawmakers speaks to the power it has amassed over the past decade and a half, even as it has struggled to gain any real traction with the public.

Three-quarters of Americans who’ve heard of crypto aren’t confident in its safety and reliability, a 2023 Pew Research survey found, and only 7 percent of Americans used crypto last year, according to the Federal Reserve. Crypto’s reputation suffered in particular from the controversy surrounding crypto companies in the last few years, especially the catastrophic meltdown of FTX. Though the first cryptocurrency was launched in 2009, it still hasn’t penetrated as a mainstream payment method, with very few retailers allowing customers to pay directly with cryptocurrency. It remains mostly a vehicle for speculative investment.

Despite that — or because of it — crypto companies have redoubled their efforts to help elect pro-crypto politicians and lobby for policies that would boost the sector’s growth. The industry wants the influx of money it’s spending to send the clear message that the crypto craze isn’t over — and in fact, isn’t a craze at all, but the lasting future of finance. “Crypto is here to stay,” Paul Grewal, Coinbase’s chief legal officer, recently wrote in public comments regarding regulation.

The sector’s most strident champions want you to believe that it’s a key issue for voters in the upcoming election, right next to inflation and health care. The industry is shouting from the rooftops that politicians can’t ignore crypto — and trying its hardest to make sure we won’t be able to either.

After a rough few years of being walloped by scandals and government crackdowns, crypto is facing an existential crisis. There are already some patchwork regulations governing the world of digital currencies, but one key issue remains hotly debated: Which government agency should oversee them?

In the US, securities like stocks and bonds have to be registered with the Securities and Exchange Commission (SEC), which comes with a host of disclosure requirements and other rules to protect investors.

As far as the SEC is concerned, the law already puts most cryptocurrencies squarely under its purview, and the agency has been aggressively pursuing enforcement against crypto exchanges like Coinbase and Binance, alleging that they’re running unregistered securities exchanges. But the crypto industry doesn’t want to be regulated by the SEC — it wants to fall under the Commodity Futures Trading Commission (CFTC) instead.

“The CFTC is a much smaller agency with far fewer resources,” says Molly White, a crypto researcher and critic who has been tracking the industry’s political spending.

Right now, there are several bills trying to clear up which cryptocurrencies count as commodities — often a physical good, like oil or wheat — and would be overseen by the CFTC, and which are securities, essentially a stake in a company that you’re hoping will net you a profit thanks to the business savvy of the firm’s leaders. One bill popular among the pro-crypto crowd is the Financial Innovation and Technology for the 21st Century Act, or FIT21 for short. It gives much of the regulatory authority of crypto over to the CFTC, and it likely means a “much riskier situation” for investors than if the SEC had primary oversight, says Claypool.

Over the last several years, the industry’s efforts to be placed under the CFTC haven’t exactly borne fruit, as the SEC has continued to come after them.

Cozying up to politicians hasn’t shielded crypto from being held accountable. The most powerful names in the industry have long professed to want to cooperate with Washington. Before the collapse of FTX, founder Sam Bankman-Fried met with Biden administration officials at least four times in 2022, and even had a private meeting with SEC Chair Gary Gensler. That didn’t stop Bankman-Fried from being convicted on multiple federal charges of fraud and given a 25-year prison sentence. Prosecutors revealed in their indictment that the former FTX head had channeled over $100 million to political contributions in the 2022 midterms, much of it to dark money groups that don’t have to disclose their donors.

Still, crypto sees the 2024 election as vital to its survival.

“A lot of people view the current administration, and potential future administrations, as extremely hostile,” says White. “Not only toward the cryptocurrency industry — the companies that are actually operating in the United States — but toward cryptocurrency as a concept.”

One major change this election cycle is how much more visible and vocal the Trump-supporting faction of crypto proponents has become. Cameron and Tyler Winklevoss, who founded the crypto exchange Gemini, tried to donate roughly $1 million worth of bitcoin each directly to the Trump campaign, apparently unaware it would exceed the FEC contribution limit. Venture capitalists Marc Andreessen and Ben Horowitz have both affirmed that they’re joining Team Trump too. Other backers include Jesse Powell, co-founder of the crypto exchange Kraken, and Charles Hoskinson, co-founder of the ethereum blockchain.

It’s worth noting that when Bankman-Fried was still the biggest face of crypto, he was known as a Democratic megadonor. We only found out later that he’d contributed roughly the same amount to Republicans through dark money groups.

Trump, for his part, was a harsh crypto critic in the past, but has recently done a 180, saying he would end Biden’s “war on crypto,” and that he would fire Gensler, the SEC chair. He even recently announced a family crypto project, run by the Trump Organization, called The DeFiant Ones — a play on “decentralized finance” — that would, according to Trump, help Americans who have been “squeezed by the big banks and financial elites.”

But crypto’s partisan inclinations are more complicated than simply supporting Republicans.

The industry’s spending is funneled mostly through the pro-crypto super PAC Fairshake, which has already spent $93.8 million this election cycle and is the second best-funded super PAC in the election, after Trump-backing Make America Great Again Inc. Fairshake’s backers include Coinbase, which has contributed a total of $50 million to the 2024 elections so far, and Ripple, a blockchain payment network that spent $49 million. (Both Coinbase and Ripple have faced SEC lawsuits.) Venture capital firm Andreessen Horowitz has also contributed $47 million to Fairshake.

Fairshake largely focuses on House and Senate races, and has been largely nonpartisan, supporting and opposing politicians of both parties based on their crypto stance. According to Follow the Crypto, a project White launched earlier this year that compiles crypto’s campaign contributions, the money spent to support pro-crypto candidates was roughly even between Democrats and Republicans up until recently.

Then, the sector ramped up support spending for Republican Bernie Moreno in his race for a US Senate seat in Ohio, where he’ll go head-to-head with crypto critic Sen. Sherrod Brown. “Now Republican spending is about double that of the Democrats,” says White. (A recent Politico piece reported that the strategy for the Ohio race in particular is causing a rift within crypto circles.)

Fairshake has enjoyed a good track record of backing the winning candidate and unseating opponents this year. It spent $10 million against Rep. Katie Porter (D-CA), a vocal crypto critic who voted against FIT21, and was recently defeated in the primary race earlier this year. It also spent $2 million to help defeat Rep. Jamaal Bowman (D-NY), and $1.4 million against Rep. Cori Bush (D-MO), also both defeated.

The willingness to spend truckloads on both Democratic and Republican candidates makes clear that the industry is using a carrot-and-stick strategy. If you show a willingness to be friendly to the industry’s interests, Fairshake is willing to spend money on your behalf. But if you don’t — it will just back your opponent. The strategy of “[trying] to discipline elected officials to just cater to this sector’s needs is very concerning,” says Claypool. “It’s incredibly threatening.”

Fairshake has not returned a request for comment.

Crypto proponents often claim that somewhere in the neighborhood of 50 million Americans own the asset. It’s a stat that Tyler Winklevoss promoted when writing on X that being anti-crypto was “political suicide.” Brian Quintenz, head of policy at Andreessen Horowitz’s crypto arm, wrote a letter to the editor in response to a critical Washington Post editorial, insisting on crypto’s widespread adoption and its populist mission, writing that “good regulation would ensure the future of the internet is not solely controlled by a handful of tech companies.” Anthony Scaramucci, founder of SkyBridge Capital and a former communications director in Trump’s White House, said in a recent interview with Cointelegraph that Democratic presidential nominee Kamala Harris could lose the election if she didn’t court the crypto vote.

Their sense of injury at not being acknowledged by America’s foremost politicians, including Harris, represents a “weird reality distortion field that happens with the crypto world, where they think they’re sort of the center of the universe,” says White.

For all the strenuous appeals to how important an issue crypto is for everyday Americans, there’s no evidence that this is actually true. Crypto appears nowhere in various surveys measuring voters’ top concerns. Another telling sign: The TV ads that Fairshake paid for don’t even mention this supposedly vital issue, instead focusing on more general attacks. “Everybody has seen ads from various corporate sectors, whether it’s the oil industry saying that such-and-such politician is going to make the price of gas go up,” says Claypool. “That’s not what the crypto sector is doing. They’re funding attack ads, and it’s all about electing crypto-friendly lawmakers, but they don’t say anything about crypto.”

Fighting for industry-friendly regulation serves another purpose beyond avoiding the grip of the SEC. Regulation helps legitimize crypto. It’s no longer a scary, risky thing with a shadowy undertone. Having a regulatory framework gives the industry a broad rubber stamp to keep chugging along now that the rules are clearer and the few bad apples have been rooted out. One recent survey, for example, suggests that the SEC’s decision to allow bitcoin to be included in ETFs — which are a bundle of stocks that can be traded on an exchange — increased Americans’ interest in investing in crypto.

Crypto companies argue that the volatility — and the rampant fraud — are just the growing pains of a small, still-young sector. Yet if all goes according to the hopes and ambitions of its advocates, crypto would in fact transform how people invest their money and store their wealth, especially as its acceptance leads to more stock portfolios and even retirement funds containing crypto.

“They want to be enmeshed in our financial system as much as they possibly can,” says Claypool. “The 2008 financial crisis demonstrated that there are benefits to being too big to fail.”

Crypto’s future is a real concern for ordinary Americans, just not in the way the industry would like people to believe. Like the predatory subprime mortgages that led to the collapse of big banks in 2008, crypto has been sold particularly enthusiastically to Black Americans and other marginalized groups, presented as an alternative to the traditional banking system that discriminates against them. We know what happened in the aftermath of the mortgage crisis: Black Americans’ homeownership rates fell, and they still haven’t fully recovered. We don’t know what will happen if crypto becomes a juggernaut of the US financial sector, but many amateur crypto traders have already been burned by crashes.

What’s certain is that the industry’s backers are unloading an arsenal of money to ensure all of us become more entangled in crypto, whether we want it or not.