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Sunday, July 21, 2024

Cryptocurrency Funds Set to Impact 2024 Election

Ryan Selkis, a cryptocurrency executive, received a surprising invitation while dining at Mar-a-Lago last month: Former President Donald J. Trump invited him to speak on stage. Selkis, who leads the crypto data firm Messari, was one of several hundred attendees at an event celebrating Trump’s series of nonfungible tokens (NFTs). At the lectern, Selkis emphasized to Trump, “There are 50 million crypto holders in the U.S. That’s a lot of voters.”

This message underscores a growing political talking point within the crypto world, as the industry aims to establish itself as a significant force in the 2024 election cycle amidst efforts to recover from recent scandals. Three large crypto firms have joined forces to finance a network of super PACs, collectively investing about $150 million to support pro-crypto candidates in congressional races.

While these PACs have no plans to participate in the presidential election, top crypto executives are mobilizing support for Trump, who has praised digital currencies and hosted industry executives at Mar-a-Lago. Crypto supporters view the 2024 election as crucial, following the Biden administration’s crackdown on the industry, which included lawsuits and criminal charges against leading figures. The Securities and Exchange Commission (SEC) has pursued cases that could drive the crypto industry out of the U.S.

Brad Garlinghouse, CEO of Ripple, stated, “The 2024 elections will be the most consequential in crypto’s history.” He and other executives argue that energized “crypto voters” could influence the election outcome, citing a survey commissioned by Coinbase that claims 52 million Americans own digital currencies. However, the Federal Reserve estimates the figure at roughly 18 million people, or 7 percent of the adult population.

Despite potential voter influence, the industry’s financial resources may prove more impactful. Ripple, Coinbase, and venture capital firm Andreessen Horowitz have each contributed about $50 million to the crypto PACs, which plan to focus on several competitive Senate races. In March, the largest PAC, Fairshake, spent around $10 million on attack ads against Representative Katie Porter, a Democratic Senate candidate in California and ally of crypto critic Senator Elizabeth Warren. Porter lost her primary.

Dennis Kelleher, president of Better Markets, remarked, “A single relatively small industry is literally trying to buy enough politicians to hijack the public agenda.” The industry’s resources have pushed crypto issues into the presidential campaign discourse. Independent presidential candidate Robert F. Kennedy Jr. launched his campaign at a Bitcoin event and has attended multiple industry conferences, sometimes holding fundraisers with wealthy executives.

President Biden is perceived as anti-crypto due to SEC Chair Gary Gensler’s lawsuits against crypto companies. Nevertheless, Biden supporters, including investor Mark Cuban, have urged the campaign to engage with the crypto community. Biden officials have recently reached out to Coinbase and Ripple to discuss crypto policy, signaling a potential shift in approach.

Despite some outreach from the Biden campaign, much of the crypto industry is rallying around Trump. While Trump once dismissed Bitcoin as a “scam,” he has recently voiced support for digital currencies, promising to end regulatory crackdowns. This month, Trump met with executives from major Bitcoin mining companies at Mar-a-Lago, where he praised the “Made in the USA” aspect of Bitcoin mining.

The last major political spending by the crypto industry was led by Sam Bankman-Fried, founder of FTX, who donated tens of millions of dollars to both Democrats and Republicans in the 2022 midterms. Bankman-Fried’s subsequent legal troubles and the collapse of FTX were significant setbacks for the industry.

Now, the industry is fighting back. Fairshake plans to participate in several Senate races, targeting critical contests in Ohio and Montana, where Democrats skeptical of crypto are up for re-election. Crypto executives believe Fairshake has already influenced some legislators, including Ohio Senator Sherrod Brown, who recently expressed openness to advancing industry-supported legislation.

Trump’s evolving stance on crypto has garnered support from executives seeking a political champion. Vivek Ramaswamy, a former presidential candidate and crypto enthusiast, has taken credit for Trump’s pivot and has been acting as a liaison between Trump and the crypto industry.

Not all crypto advocates are aligned with Trump. At a recent conference, Marvin Ammori, a Democrat and executive at Uniswap, debated Selkis on the industry’s political strategy, cautioning that Trump may not fulfill his promises. However, Trump reiterated his support for crypto at a recent fundraiser, attended by key industry figures including Selkis and executives from Coinbase and other crypto firms.

David Faber
David Faber
I am a Business Journalist of The National Era
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