Cryptocurrency businesses aims to elect supporters
Crypto companies are struggling to stay afloat amidst a wave of regulatory measures. Their most recent approach: making significant investments in this year’s elections.
The industry has accumulated a substantial amount of funds and is actively supporting politicians it perceives as supportive while aiming to defeat those who are critical. Three political-action committees have collectively raised over $85 million, making it one of the highest amounts among PACs involved in the 2024 elections.
Fairshake, along with two affiliated super PACs, managed to secure funds from a prestigious group of investors, which included prominent players like crypto exchange Coinbase Global and Cathie Wood’s ARK Invest. The driving force behind this momentum is the significant increase in cryptocurrency prices.
“This is the first time we’ve had all the necessary components aligned,” stated Kristin Smith, CEO of the Blockchain Association, an industry organization.
For quite some time, affluent investors and large corporations have utilized campaign donations and lobbyists to secure influence in Washington. The unique aspect of the crypto industry’s current situation is the potential impact on its operations within the United States. Amidst allegations of securities law violations and criminal indictments being unsealed, certain companies have sought growth opportunities abroad or even considered relocating.
In a recent interview, former President Donald Trump was questioned about his plans to address the issue of crypto companies relocating outside the United States if he were to be re-elected.
“If we are going to embrace it, then we have to allow them to be here,” Trump expressed his support for the industry at Mar-a-Lago, his social club and part-time residence in Florida.
Fairshake has not yet provided their analysis on the presidential election.
Previous efforts by cryptocurrency supporters to sway elections have not received as much financial backing. In 2022, Sam Bankman-Fried, the founder of FTX, made a significant contribution to a PAC, resulting in a total fundraising amount of $12 million. Bankman-Fried was sentenced to 25 years in prison by a federal judge for multiple counts of fraud earlier this year.
This cycle stands out from the rest. The industry has united in response to a series of legal actions by the Securities and Exchange Commission. Crypto firms have hired additional lobbyists to persuade lawmakers that Bankman-Fried’s FTX does not represent the entire industry.
Fairshake, which was launched late last year, has emerged as a frontrunner in spearheading the initiatives. The group unites key figures in the crypto industry, such as the parent company of crypto exchange Kraken, venture-capital firm Andreessen Horowitz, and stablecoin issuer Circle Internet Financial.
The current focus has been primarily on Congress. The industry is advocating for legislation that aims to regulate issuers of stablecoins, or dollar-pegged cryptocurrencies, in order to facilitate seamless trading in and out of the market. The legislation aims to establish regulations for issuers, which would include a requirement for tokens to be fully backed by reserves.
Fairshake accumulated funds through both monetary and digital currency contributions. Phil Potter, the former chief strategy officer at crypto exchange Bitfinex, made a generous contribution of 33 bitcoins to the PAC last summer, amounting to approximately $1 million. The tokens were exchanged for cash, according to a statement from a Fairshake representative.
So far, Fairshake has reported spending $25 million in the current election cycle. In a notable move this year, it embarked on its largest spending campaign yet, with the goal of defeating Katie Porter, a California congresswoman who is running for Senate. The group spent $10 million on ads targeting Porter, a figure who is highly regarded by many liberals and known for criticizing the energy consumption of bitcoin.
The advertisements by Fairshake emphasized issues that appeal to a broader audience, alleging that Porter accepted money from major financial institutions, pharmaceutical companies, and oil corporations, rather than focusing on Porter’s position on cryptocurrency. Porter was ultimately defeated in the primary election.
Porter criticized Fairshake for their lack of genuine dialogue with candidates, suggesting that their tactics are aimed at intimidating elected leaders into accepting their agenda.
The impact of Fairshake’s efforts on the outcome of the race remains uncertain. However, the crypto industry is becoming more transparent about its intention to impact campaigns.
Stand With Crypto, a nonprofit organization that originated from Coinbase, has recently unveiled the establishment of its associated PAC. In addition, it evaluates the performance of different politicians. President Biden, whose administration has taken a strong stance against cryptocurrency, received a failing grade.
Meanwhile, presidential candidate Robert F. Kennedy Jr. received higher praise for his remarks on crypto at a conference last year, emphasizing its role as a safeguard against government and corporate expansion.
