Regulation
Don’t let the cryptocurrency industry push its way into a new regulatory policy
The cryptocurrency industry is just the latest in a long line of corporate interests seeking to distort our democracy by converting their financial power into political power. But it’s not every day you see an industry operating on the fringes of the law trying to buy legitimacy, writes Robert Weissman of Public Citizen.
Chris Ratcliffe/Bloomberg
THE cryptocurrency sector has a big problem: Federal regulators believe many leading cryptocurrency companies, not just the infamous one FTX by Sam Bankman-Friedoperate outside the bounds of the law.
But the industry that is literally in the business of producing money has a solution: spend large amounts of money – not cryptocurrencies, but real dollars – on our elections, in order to change the laws.
Cryptocurrency super PACs have already raised more than $160 million to spend on the 2024 congressional elections, according to one study. May report from the Public Citizen and recent disclosuresNo other super PAC has raised more money so far this cycle.
All this money does nothing to promote civic education. The industry openly boasts of its plan to leverage political spending to acquire new rules and regulatory legitimacy. And they are already making great strides.
The House of Representatives on May 22 passed a bill 279-139 this would give the US government’s official blessing to an industry with no demonstrable public benefit. The bill would make the Commodity Futures Trading Commission – widely seen as a lax financial regulator – the primary overseer of digital assets.
“We will have the resources to influence the races and the composition of institutions at all levels,” She said Josh Vlasto, a spokesman for the industry’s leading super PAC, called Fairshake. “And we will leverage these resources strategically to maximize their impact in order to build a sustainable, bipartisan coalition for cryptocurrencies and blockchain.” Not so surprisingly, Vlasto is a former chief of staff for New York Governor Andrew Cuomo and former top aide to Senate Majority Leader Chuck Schumer (DN.Y.).
More than half of the money that funds Fairshake and its affiliates, Protect Progress PAC and Defend American Jobs PAC, comes directly from crypto companies. Coinbase and Ripple Labs, each contributing approximately $48 million, are the largest contributors.
Four of the eight donors to the company’s crypto super PAC have settled or are facing charges from the Securities and Exchange Commission over alleged violations of securities laws. Ripple Labs alone is reportedly facing nearly $2 billion in fines. With their political spending, crypto firms hope to undermine the SEC and provide a government seal of approval to a reckless and speculative investment industry.
“We need to make sure that [SEC] it is not being weaponized by a political agenda,” said Coinbase CEO Brian Armstrong She said. “To do that, the cryptocurrency industry will have to become a little more sophisticated and powerful in terms of the lobbying efforts and political power we can wield for the 2024 elections.” Armstrong himself contributed $1 million to Fairshake.
Although supporters of super PACs are explicit that their purpose is to drive their political agenda in Washington, they are less interested in revealing their purpose to the voters they seek to influence.
Fairshake spent $10 million against Rep. Katie Porter in California’s Democratic Senate primary race. None of the ads the super PAC ran against Porter mention cryptocurrency. Instead, they deploy a strategy of carefully formulated “populist” attacks seeking to paint their target as an untrustworthy politician.
Similarly, Fairshake affiliate Defend American Jobs spent $3 million to support Jim Justice in West Virginia’s Republican Senate primary. The super PAC released an ad praising Justice as a “can-do businessman” and a “rock-solid conservative who fought for jobs in West Virginia,” but makes no mention of cryptocurrencies .
Among Fairshake’s stated goals in the general election are Ohio and Montana, where incumbent Democrats are defending seats in states Trump won in 2020. Both incumbent senators — Senators Sherrod Brown in Ohio and Jon Tester in Montana – are part of the Senate Banking Committee and have had a strong influence criticizing the Ponzi schemes and rampant fraud that have characterized the cryptocurrency sector.
The narrow partisan divisions in Congress mean that the crypto sector’s enormous influence in a small number of races has the potential to shift control of Congress to one party or the other.
The cryptocurrency industry is just the latest in a long line of corporate interests seeking to distort our democracy by converting their financial power into political power.
But it’s not every day you see an industry operating on the fringes of the law trying to gain legitimacy. The spectacular collapse of FTX at the expense of millions of people, many of whom lost their life savings, plus the widespread use of the cryptocurrency for money laundering and other illicit purposes, should have put an end to any talk of supply of extremely flexible regulatory standards for cryptocurrencies. corporations.
And so it would have been, if the merits had guided the political discussion. The cryptocurrency kings know very well that they will lose the political competition if it takes place on a level playing field. So, they are using the money they are making in the inflated cryptocurrency markets to tilt the field. Unfortunately, when crypto firms fail or bubbles deflate, it is small investors who suffer the worst hits. This is a predictable and preventable crisis: the time has come to stop the cryptocurrency industry from making its way to regulatory legitimacy.