Regulation
The cryptocurrency industry’s influence on US elections is greater than ever, industry experts say
The cryptocurrency industry is throwing its weight around in Washington in hopes of influencing the upcoming US elections, spending an unprecedented amount of money to elect cryptocurrency-friendly candidates and educate lawmakers, all in the hopes of finally getting a regulatory framework friendly for cryptocurrencies.
Cryptocurrency-focused political action committees (PACs) like Fairshake, which has raised around $85 million from a number of crypto companies, senior executives and retail investors – have successfully determined the outcome of some major races, including spending $10 million to help crush the offer by crypto-critic Rep. Katie Porter (D-Calif.).
Fairshake has also poured money into two affiliated PACs: Defend American Jobs, which donates to Republican candidates, and Protect Progress, which donates to Democrats. Both donated to the winning campaigns. Over the past two months, Defend American Jobs has spent nearly $500,000 on media buys for Republican Indiana State Senator Mark Messmer, who won the Republican nomination for Indiana’s 8th District congressional seat this week.
Some of Protect Progress’ crypto-friendly Democratic candidates, including Shomari figureswho is running for a House seat in Alabama and Giulia Johnson in Texas, they won the primaries in part with the help of media buying.
“It’s at a level we haven’t seen in past election cycles,” said Kristin Smith, CEO of the cryptocurrency lobbying group Blockchain Association.
Industry experts say the industry’s economic power has even pushed some cryptocurrency skeptics, including Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, who is up for re-election this year, to take a more stance. open. careful attitude towards cryptocurrencies, lest they face well-funded opposition efforts from the industry.
“Previously he was not friendly with cryptocurrencies, but recently [Brown] has said he’s open to considering cryptocurrency legislation,” said Kyle Bligen, director of financial policy at the tech-focused House of Progress. “I think he’s aware of money coming in from outside industry groups that are looking of politicians who are open to reasonable choices, common sense policies on cryptocurrencies and are not just trying to prop up or support the traditional financial ecosystem without enabling innovation.”
While the industry’s past efforts to influence election results nationwide have been largely unsuccessful – and, in the case of former FTX CEO Sam Bankman-Fried, criminal – The growing political influence of the cryptocurrency industry now seems to have more power.
“It’s a much more sophisticated operation,” Smith said. “I feel like I walk around Washington and people say ‘Oh, there’s Kristin, she works for that little blockchain industry thing.’ Now it’s like, ‘Oh wow, this is the powerful cryptocurrency industry and they’re here to influence Washington and they’re pulling out all the tools to do it.’
While the cryptocurrency industry has largely focused its lobbying efforts on congressional elections, the U.S. presidential election will also have a significant impact on cryptocurrency regulation.
According to at least one small survey commissioned by cryptocurrency investment firm Paradigm, voters hold cryptocurrencies they tend to prefer Donald Trump for president – although, according to other polls, the the percentage of voters who own cryptocurrencies is smallL. Polymarket bettors currently give Trump a slight edge to win (47% versus Biden’s 44%). But industry insiders are less sure whether a Trump presidency would actually be better for cryptocurrencies.
While Trump’s stance on the cryptocurrency industry is changing, he is still significantly less pro-crypto than that of his former rival for the Republican presidential nomination, Vivek Ramaswamy, who promised to protect cryptocurrency developers and create a clear regulatory framework for cryptocurrencies that would see most tokens as commodities.
“Trump looks to Vivek on technology and digital asset policy,” said Lee Bratcher, founder and president of the Texas Blockchain Council. “He didn’t always do it, but when he saw how Vivek won over the Republican – and more centrist – voter [voters] than Trump can capture – he’s probably more interested in that [policy].”
Industry insiders were divided on whether a Biden re-election would be harmful to the cryptocurrency industry.
Smith said it would probably be “more of the same, unless [Securities and Exchange Commission Chair] Gary Gensler decides to step aside,” meaning continued regulatory uncertainty and aggressive enforcement actions. A better, more open-minded SEC chairman, he added, would be “extremely helpful.”
“It’s unfortunate because at the beginning of the Biden administration there was some interest in cryptocurrencies, then the industry imploded while they were doing all their reporting and as a result they are in a clearly negative position right now,” Smith said. “ON [Biden’s] look, the industry has had some not-so-great times and it’s understandable that regulators are concerned.”
Smith said that while the cryptocurrency industry has largely moved on from the cryptocurrency crash of 2022 – including the implosions of FTX, Terra/LUNA and Three Arrows Capital – regulators have a much longer memory.
“Having a new group of regulators would be helpful in restarting conversations,” Smith said.
Others, like Bligen, seemed more confident that pro-cryptocurrency legislation would pass after the election if Biden remains in power.
“I can’t say that if President Biden is re-elected it would be a loss for cryptocurrency advocates, because currently in this regime Democrats and Republicans are working together on a bipartisan basis to produce productive and responsible cryptocurrencies. [legislation]”Bligen said.
Efforts are underway in the current Congress to pass cryptocurrency legislation, including a bipartisan effort to regulate stablecoins.
These legislative efforts – which, in the past, have failed to find traction – still have significant hurdles to overcome before being passed, including multiple members of Congress getting involved with cryptocurrencies.
Bligen said there are still many members of Congress who don’t know much about cryptocurrency, and the things they do know about it “come from flashy headlines about cryptocurrency scams, people misrepresenting coins, people getting cheated out of their money, massive cryptocurrencies failing institutions – they look at it from a protectionist point of view,” he said.
“If you want to have more cryptocurrency-friendly people, every single office needs to have a basic understanding of what cryptocurrency is, why it matters to my constituents, and what the political landscape is that governs it. Everyone needs to know that.” , Bligen said. “If you don’t have this basic information, you will have members stumbling around, trying to understand what blockchain technology is… more concerted educational efforts are needed. We won’t just reach a more educated audience in 2025, we need work.”
Bratcher added that, in addition to educational efforts, the industry may have to compromise on some issues – such as privacy – to make real progress with lawmakers.
“We are at an interesting crossroads when it comes to privacy,” Bratcher said, referring to the ongoing crackdown on bitcoin mixing services like Tornado Cash and Samourai Wallet.
“People in the digital asset industry want to prioritize privacy above all else. When we work with government – state, local and national, and even law enforcement – we don’t have the luxury of being able to make grandiose claims at the Regarding this, Bratcher added: “There will have to be a balance between privacy and issues related to money laundering and national security.”
“Tornado Cash is not a hill I’m willing to die on,” Bratcher said. “We could lose a war if we choose to die on Tornado Cash Hill.”
While the spotlight is on national elections, Bratcher and others — like Dennis Porter, CEO and co-founder of bitcoin mining advocacy group Satoshi Action Fund — are focusing their efforts on state politics.
Porter’s group helped introduce bills in 16 U.S. states that provide protections for bitcoin mining and self-custody. The most advanced bill is in Oklahoma, where it has passed both the state House and Senate, and is awaiting the signature of Governor Kevin Stitt (right).
“DC is fun and sexy. Tons of money is being spent, but so far we haven’t seen any big victories — all the big battles are happening at the state level,” Porter said.
Porter said the industry should continue to strengthen its presence in Washington, but said it won’t find the magic cure for all its ills on Capitol Hill.
“We will do this at the state level,” Porter said. “We will go state by state to advocate for pro-digital asset policy, using states as a laboratory for democracy, ultimately taking those good ideas and using them to influence policy at the federal level. Or at a minimum, creating a regulatory regime that protects people at the state level.”
Porter’s model for cryptocurrency regulation takes cues from the cannabis industry’s agenda, building momentum and support in states until the industry is powerful enough to shape federal regulations.
“We’re hitting home runs over and over and over again in Washington, but we’re still not strong enough,” Porter said. “I just think we’re further away from that than we think… The important thing to me is that we need to spend a lot more time at the state level, investing a lot more money, because the hundreds of millions of dollars spent in D.C., if spent at the state level, it would fundamentally reshape the political landscape and fundamentally change the dynamic of bitcoin and digital assets in America.”