Source: Wired
By Joel Khalili
Compiled by: BitpushNews Yanan
Despite being relatively small and yet to demonstrate significant mainstream utility, the cryptocurrency industry has invested more money in the U.S. election than any other sector.
At the Democratic National Convention in Chicago this week, Jonathan Padilla, a self-described “cryptocurrency expert,” wandered the floor, where American flags and blue signs were everywhere.
Padilla, wearing a baseball cap and a striking pineapple-print shirt, wandered the floor discussing cryptocurrency policy with anyone who would listen. He posted a selfie on Facebook with his arm around the shoulders of Sen. Chris Coons of Delaware, captioning it: “Sen. Coons now understands crypto, too.”
Padiya is very happy that he can get this new title of "cryptocurrency expert" at the Democratic National Convention. He believes that this indicates that cryptocurrency has successfully entered the political agenda. Padiya said: "Four years ago, cryptocurrency was still an irrelevant topic and almost no one talked about it. But now, you can see Trump mentioning it at important meetings, and some of the highest-level Democrats are also discussing this topic."
Padiya is the founder of cryptocurrency marketing company Snickerdoodle Labs. He previously served as a resident blockchain consultant at PayPal. He is also one of the founders of Crypto4Harris, a coalition of cryptocurrency industry members who support the Democratic Party. Padiya said the group's goal is to encourage Kamala Harris to support cryptocurrency-related legislation and show that the cryptocurrency industry "is not unanimously in favor of the Republican Party."
On August 14, Crypto4Harris hosted a virtual town hall meeting with several prominent Democrats, including Senate Majority Leader Chuck Schumer, who said, “I believe in the future of cryptocurrencies.” Padilla said the group has also made “inroads among the finance and policy staff” within Harris’ camp.
The group’s outreach to Harris’ team reflects a massive shift in attitudes toward cryptocurrencies in U.S. politics. Politicians seem to have come to terms with the fact that there is a group of voters who will vote based solely on which candidate can make their investments skyrocket. (You know, they might ignore other issues like immigration and health care.) Not to mention that cryptocurrency businesses are throwing money around and making big donations.
An analysis by Public Citizen, a nonprofit consumer advocacy group, shows that cryptocurrency companies have invested "unprecedented" amounts of money to influence the outcome of this year's U.S. election after the price of cryptocurrencies rose in 2024. Although these companies are relatively small in terms of revenue and cryptocurrencies still lack obvious use cases beyond financial speculation, donations from cryptocurrency companies accounted for 48% of all corporate donations in this election cycle.
The cryptocurrency industry has already invested some money in the previous 2020 election. But in the 2024 campaign, their attempts to intervene appear more urgent and powerful. Veronica McGregor, chief legal officer of cryptocurrency wallet company Exodus, said in her personal capacity as an industry veteran: "The cryptocurrency industry believes that this election is about survival. No matter who enters the White House, changes need to be made so that our industry can thrive."
Political donations from the cryptocurrency industry are primarily made through three related super PACs: Fairshake, ProtectProgress and Defend American Jobs. These organizations cannot donate directly to political candidates but are free to spend money to support candidates with a cryptocurrency-friendly stance.
During the Biden administration, cryptocurrency companies feel that they have been treated unfairly by regulators. To this end, they have supported politicians who are willing to formulate special regulations for cryptocurrencies through super PACs. These companies hope to clarify the legal status of cryptocurrencies and determine the corresponding regulatory framework, thereby ending the current regulatory dispute.
Fairshake has raised the most money of any super PAC, more than $200 million. This amount is ahead of not only other cryptocurrency-related committees, but also all other industry-related organizations. Major donors to the committee include Coinbase and Ripple, the cryptocurrency-backed venture capital firm a16z, and an investment firm founded by brothers Cameron and Tyler Winklevoss, founders of the cryptocurrency exchange Gemini.
Coinbase, Fairshake’s largest donor, has given $45 million to the fund, but is now facing a formal complaint from the Federal Election Commission. The complaint was filed by consumer advocacy group PublicCitizen and software developer Molly White, founder of Follow the Crypto, a project that tracks donations from the cryptocurrency industry. The complaint alleges that Coinbase violated campaign finance laws by donating to Fairshake while negotiating with the government to become a federal contractor.
Coinbase declined an interview request but provided a public statement from its chief legal officer, Paul Grewal, who has disputed the idea that the company is a federal contractor because the services it provides are not funded by tax dollars. “We believe Coinbase is trying to find a loophole in the law to defend itself, but there is no such loophole,” White said.
She further said: “The cryptocurrency industry has a history of ignoring laws it doesn’t like, and it would be nice to see some penalties for such behavior. I don’t like seeing large companies or extremely wealthy executives spending money in ways that are out of reach for the average voter. I just hope that these expenditures are at least legal and compliant.”
The Federal Election Commission is currently deciding whether to fine Coinbase. But in the meantime, these crypto super PACs are effectively using their coffers to target crypto opponents. In California, Fairshake spent $10 million on ads attacking California Democrat Katie Porter, who was running for Senate, which ultimately led to her defeat in the primary. The same fate befell Democratic Congressmen Jamaal Bowman and Cori Bush, who also lost their respective primaries after Fairshake spent a combined $3.5 million to discredit them. Notably, none of these hostile ads mentioned cryptocurrencies.
Fairshake declined to discuss its strategy publicly, but there is one commonality among the candidates it opposes: They either allied themselves with outspoken cryptocurrency critics, such as Massachusetts Sen. Elizabeth Warren, one of the industry’s most beloved villains, or failed to vote for draft legislation that is popular in cryptocurrency circles.
In 2022, Porter teamed up with Warren to launch an investigation into the impact of cryptocurrency mining on the Texas energy grid. In May, Porter, Bowman, and Bush all voted against a cryptocurrency bill that would have clarified the jurisdiction of the Securities and Exchange Commission. Under the Biden administration, the U.S. financial regulator has launched a series of lawsuits against a number of cryptocurrency companies, including Coinbase. (Nevertheless, the bill was passed by an overwhelming majority and is currently awaiting Senate approval.)
So far, most of the industry's leading figures have sided with the Trump campaign: The Winklevoss twins each donated $1 million to Trump, and Kraken exchange co-founder Jesse Powell also made a generous donation. A16z founders Marc Andreessen and Ben Horowitz also publicly expressed their support for Trump.
Trump, for his part, has recently begun to portray himself as the "cryptocurrency president," despite previously disparaging Bitcoin as a "scam." In July, at a conference in Nashville, Tennessee, Trump promised thousands of Bitcoin supporters that if re-elected, he would make the United States the "cryptocurrency capital of the world" and establish a national "Bitcoin reserve." The loudest cheers of the night came when Trump promised to fire Securities and Exchange Commission Chairman Gary Gensler.
“There’s a lot of anger and frustration in the industry about not knowing what to do all the time,” McGregor said. “We think we’re complying, but the SEC or someone else is suing us. We feel like we’re serving many different masters. That’s not the way regulation should be.”
Groups like Crypto4Harris are working to create a "reset" with the Harris campaign to break the stereotype that Trump is the only rational choice for cryptocurrency supporters. "People are angry, people are worried," Padilla said. "But I think if we can achieve a reset with the Harris campaign, there's a good chance that it will cool down."
In stark contrast to her Republican opponent, Harris has remained silent on her crypto stance. The 2024 Democratic platform does not mention anything about cryptocurrencies. However, on Wednesday, an adviser to Harris revealed for the first time that the vice president may be considering a compromise. "She will support policies that ensure the continued development of emerging technologies and related industries," the adviser told Bloomberg.
All parties in the cryptocurrency industry have come to a common conclusion for different reasons: the 2024 election is about "survival." Trump supporters believe that if Harris is elected president, it will mean that the bad situation during the Biden era will continue, and the so-called "reset" is just a misleading. Cameron Winklevoss wrote on the X platform: "We will not be fooled," and specifically tagged Harris in the post.
Meanwhile, cryptocurrency advocates who support the Democratic Party believe that Trump's enthusiastic pursuit of the industry is just a naked election strategy. Padilla said: "You have to ask yourself: Is Donald Trump really a person you can trust? Of all the people running for president, the only one who has ever said that cryptocurrency is a scam is Donald Trump."
