The cryptocurrency industry has been rocked by internal disagreements over how best to spend its money in the 2024 elections to boost candidates who share their interests.
The rift within cryptocurrency circles comes as the industry has poured a record amount of cash into races this cycle, spending more than $119 million. The spending accounts for almost half of all corporate political contributions this cycle, being second only to spending for fossil fuels, according to a report from the consumer advocacy group Public Citizen.
But divisions within cryptocurrency circles began to emerge after Defend American Jobs PAC, an affiliated PAC of the FairShake PAC, announced last month that it would spend at least $12 million to support Republican Bernie Moreno in his race against Sen. Sherrod Brown (D-OH).
Immediately after that, Democratic donor Ron Conway announced he would be leaving the cryptocurrency super PAC after telling other donors in an email that he disagreed with the decision, concerned that efforts to go after Brown could undermine efforts from Senate Majority Leader Chuck Schumer (D-NY) to pass pro-cryptocurrency legislation by the end of the year. Conway had previously donated $500,000 to FairShake in December.
“This is a very personal decision for people, and it often can be very emotional,” Blockchain Association CEO Kristin Smith said in an interview with the Washington Examiner. “There are some people who are crypto-only voters, but there are some people that aren’t.”
There was also frustration among Republicans on Capitol Hill after FairShake decided to endorse Reps. Ruben Gallego (D-AZ) and Elissa Slotkin (D-MI) for their Senate races, according to three people familiar with discussions.
Sen. Cynthia Lummis (R-WY), a vocal supporters of pro-cryptocurrency legislation, wondered if her colleagues on the other side of the aisle are beginning to support the industry just because they see how powerful it has become.
“I have to say, I do wonder with some of them whether their sudden interest in digital assets is based on the industry’s involvement in these races,” she said.
According to Follow the Crypto, a project launched by researcher Molly White, Republican spending is now more than that of Democratic candidates. Cryptocurrency PAC expenditures in favor of Republican candidates were $54.6 million compared to $34.7 million in support of Democratic candidates. The industry spent $283,000 opposing Republican candidates in comparison to $14.2 million opposing Democratic candidates.
“The issue is they’re in a situation where that’s pissing off everyone and everyone is mad,” one crypto industry advocate granted anonymity to speak candidly said.
The advocate said it’s not surprising that the industry has been leaning more toward the right lately. Several Democrats have been hostile to the industry, specifically accusing the leader of the Securities and Exchange Commission, Gary Gensler (who was appointed by President Joe Biden), of unfairly targeting the industry.
“There are a lot of feelings that I think quite personally are justified about the way Gary Gensler has treated the industry and how he’s been allowed to do that by the Biden Administration,” the cryptocurrency industry advocate said. “It is also no secret that business tends to be slightly more Republican than Democrat.”
Gensler testified before Congress alongside his fellow SEC commissioners on Tuesday, appearing before the House Financial Services Committee. He will also testify before the Senate Banking Committee on Wednesday. Gensler’s aggressive approach to the digital assets space is expected to be under the microscope.
Others are pointing to another major industry foe, Sen. Elizabeth Warren (D-MA), who has staunchly opposed industry-backed legislation and has pushed for a regulatory crackdown instead. The industry has donated generously to her long-shot GOP opponent John Deaton, but he has virtually no shot of unseating Warren in deep-blue Massachusetts. According to financial records, cryptocurrency-focused PACs have spent $1,699,807 to support his candidacy. They have spent $397,538 to oppose Warren.
“I think there’s no question a Republican Senate would be preferable to a Democratic-led Senate because of Elizabeth Warren,” Smith said. “It doesn’t mean we don’t have great Democratic champions and friends who are interested in getting the regulatory framework right in the Senate on the Democratic side, but anything that gives Sen. Warren the ability to influence the agenda is problematic, and I think as we move forward, she’s going to find herself in a more isolated position compared to her colleagues.”
The Washington Examiner has reached out to Warren’s office for comment.
Trump and Harris’s stance on cryptocurrency becomes flashpoint
While the cryptocurrency-aligned super PACs have largely focused on congressional races, there has also been a more visible and vocal Trump faction of the industry. Cameron and Tyler Winklevoss, who founded the cryptocurrency exchange Gemini, gave around $1.7 million combined in bitcoin to the Trump 47 Committee, which raises money for Trump. Venture capitalists Marc Andreessen and Ben Horowitz have also confirmed they’re joining Team Trump too.
The 2024 Republican presidential nominee, who had notably been skeptical of cryptocurrency, has recently painted himself as a cryptocurrency advocate and recently launched a new cryptocurrency business with his family. Last week, he made an overture to the industry, paying for burgers with Bitcoin at a cryptocurrency-themed bar in New York.
Vice President Kamala Harris, the Democratic nominee, has begun to signal she would pursue more supportive policies than Biden. She vowed to help grow investment in cryptocurrency to donors in New York over the weekend.
“We will encourage innovative technologies like AI and digital assets, while protecting our consumers and investors,” Harris said in remarks reported by Bloomberg.
Some cryptocurrency lobbyists and industry experts believe since Harris became the nominee, the industry should be doing a better job to make more inroads with her team.
Congressional action to regulate industry
Congress is looking to pass several bills that would provide a regulatory framework for the industry.
Last month, Schumer said he believes a bipartisan cryptocurrency bill could pass the Senate by the end of the year during a virtual town hall. He did not specify which bill he was referring to, but there are a number of measures under consideration.
Sens. Lummis and Kirsten Gillibrand (D-NY), both on the Senate Banking Committee, introduced a bill this spring that would introduce a broad set of safeguards to a type of digital asset that’s used to facilitate other cryptocurrency transactions.
Sen. Debbie Stabenow (D-MI), the chairwoman of the Senate Agriculture Committee, recently introduced a bill that would give the Commodity Futures Trading Commission an expanded role in overseeing digital assets. Bipartisan negotiations on the legislation on her panel broke down ahead of the August recess and after Sen. John Boozman (R-AR), the top Republican on the committee, noted he had concerns about the bill.
“The bottom line is that it was Republicans who blocked the crypto bill that Sen. Stabenow put together on the Ag committee, and we are going to have to figure out how to move forward from here,” Schumer said in response to a question from the Washington Examiner.
Some lawmakers and industry experts believe that a cryptocurrency bill could happen during the lame-duck period.
“I continue to work with both parties to make that happen, and I appreciate that I’ve even had the opportunity to make some comments on what’s going on in the AG committee with their legislation,” Lummis said. “I continue to approach this topic with hopes that during the lame duck, we’ll be able to get a comprehensive framework across the finish line.”
Others believe meaningful legislation may have to wait until the next Congress.
“The House made a ton of progress this year, this Senate did quite a bit of work on it this summer, but I think there’s a long ways to go to get the details done, and I think the next Congress is going to have a strong foundation on these issues,” Smith said.
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Nevertheless, because of the legislation regarding cryptocurrency, Lummis told the Washington Examiner that she believes it’s a critical time for the industry to get involved in the election.
“They’re getting slapped with penalties and enforcement actions after they sought guidance on how to comply at the SEC,” Lummis said. “They did the best they could, and then the SEC penalized them and slapped them with enforcement actions, so now they have to pay lawyers to defend themselves at the SEC.”
“Their money could be better spent, not paying lawyers to defend them, but to support candidates who understand the asset class and want to see a statutory framework that creates clear rules of the road for how the industry can comply,” she added.