According to a recent media report, crypto companies are increasingly engaging in American politics by making significant financial contributions to politicians. This trend has emerged in response to changing sentiments in Washington concerning the digital services market.
Firms like Coinbase have been boosting their financial backing for pro-crypto lawmakers, with the goal of influencing legislation in Congress prior to the 2024 presidential election. Notable venture investors like Ronald Conway, Fred Wilson, and the Winklevoss twins have joined this effort, a news source reports.
One development highlighted by the report is the emergence of initiatives like Fairshake, which allows crypto-friendly candidates to accept unlimited campaign donations from corporations and individuals for the 2024 elections. Last week alone, crypto companies funneled $78 million into Fairshake, reflecting their desire to exert influence in the political arena.
Coinbase's top executive, Faryar Shirzad, emphasized the importance of depoliticizing cryptocurrency, stating, "We are going to do whatever it takes to depoliticize cryptocurrency. Our lobbying, our grassroots work and now Fairshake will create room for a public debate on the merits, instead of our industry being used as a political football for demagogues who don’t understand the social benefits of the technology.”
Despite the notable contributions to political campaigns, it is essential to highlight that their expenditure on lobbying for cryptocurrency-related legislation in 2023 was relatively small. Coinbase and Circle, for instance, only spent $4 million and $760,000, respectively, since 2021. This comparatively low amount emphasizes the industry's commitment to actively collaborate with politicians and policymakers.
Media reports indicate that industry critics like Democratic Senator Elizabeth Warren are increasingly holding sway over US crypto policy. In October 2023, she and about a hundred other lawmakers penned a letter to the White House and the US Treasury Department, urging them to take action against crypto companies. Their concerns were fueled by reports suggesting that digital assets played a role in financing militant activities in the Middle East.
Senator Warren's perspective on digital assets is driven by her national security concerns. She sees cryptocurrency as an unregulated realm that appeals to criminal elements. She argues that the lack of global regulations permits certain industry players to bend the rules, potentially enabling illicit activities like money laundering.
Additionally, the news report drew attention to the heightened political scrutiny of the cryptocurrency industry, particularly after the imprisonment of FTX founder Sam Bankman-Fried on fraud charges. The FTX CEO openly acknowledged the industry's susceptibility to money laundering and sanctions evasion. In response to the perceived lack of action from influential members of Congress in establishing comprehensive regulatory guidelines for the crypto sector, the creators of Fairshake have stated that their initiative is, to some extent, motivated by this concern.
Fairshake has reportedly spent $292,000 so far, with a significant portion of the funds going to former House Financial Services Committee Chairman Patrick McHenry.
The stepped-up engagement of cryptocurrency companies in politics has caught the attention of many, prompting speculation that this may be an effort to influence the upcoming elections. This is particularly notable if the Democrats secure both the presidency and Congress.
This heightened political engagement is a proactive measure to ensure that candidates from both major political parties who support the crypto industry are elected. In the words of Orlando Cosme, founder of OC Advisory, "I view the increased lobbying effort as more of an attempt to impact this election and make sure that pro-crypto candidates, from both sides of the aisles, are elected rather than a response to recent enforcement actions and court cases.”