The Crypto Industry Is Trying to Elect Political Allies. The Stakes Couldn’t Be Higher.
Coinbase, Kraken and others are fighting for survival after a regulatory crackdown
ALEXANDRA CITRIN-SAFADI/WSJ; ISTOCK
By Caitlin Ostroff and Vicky Ge Huang
May 21, 2024 8:00 am ET
Crypto companies are fighting for survival after a regulatory crackdown. Their latest strategy: spending big on this year’s elections.
The industry has amassed a formidable war chest and is working to elect politicians it sees as allies and defeat those who are critical. A trio of super political-action committees has together raised more than $85 million, one of the largest amounts among PACs engaged in the 2024 elections.
Fairshake, along with two affiliated super PACs, raised the funds from an industry A-list, including crypto exchange Coinbase COIN 1.18%increase; green up pointing triangle Global and Cathie Wood’s ARK Invest. The push is being powered by a surge in crypto prices.
“This is the first time we’ve really had all the pieces in place,” said Kristin Smith, chief executive of the Blockchain Association, an industry group.
Kristin Smith, CEO of the Blockchain Association. PHOTO: ERIC LEE/BLOOMBERG NEWS
Wealthy investors and big companies have long used campaign donations and lobbyists to win influence in Washington. What sets the crypto industry’s push apart this year is that its ability to keep operating in the U.S. is at stake. With regulators filing civil lawsuits alleging that the industry is running afoul of securities laws and prosecutors unsealing criminal indictments, some companies have been looking overseas for growth or relocating entirely.
Earlier this month, former President Donald Trump was asked what he would do if re-elected to stop crypto companies from leaving the U.S.
“If we are going to embrace it, then we have to let them be here,” Trump said in support of the industry at Mar-a-Lago, his social club and part-time residence in Florida.
Fairshake hasn’t yet weighed in on the presidential election.
Previous attempts by crypto advocates to influence elections haven’t been as well-funded. In 2022, FTX founder Sam Bankman-Fried contributed to a PAC that ultimately raised $12 million. A federal judge sentenced Bankman-Fried to a quarter-century in prison on several counts of fraud earlier this year.
This cycle is different. The industry has banded together after a string of lawsuits from the Securities and Exchange Commission. Crypto firms have brought on more lobbyists, working to convince lawmakers that Bankman-Fried’s FTX isn’t indicative of the industry.
Fairshake, launched late last year, has been leading the efforts. The group brings together the major players in crypto, including the parent company of crypto exchange Kraken, venture-capital firm Andreessen Horowitz and stablecoin issuer Circle Internet Financial.
The efforts so far have focused on Congress. The industry is supporting legislation that would regulate issuers of stablecoins, or dollar-pegged cryptocurrencies, which make it easier to trade in and out of the market. The legislation would set rules for issuers, including requiring that tokens are completely backed by reserves.
Brian Armstrong, CEO of Coinbase Global, spoke at a Stand With Crypto rally in March. PHOTO: MARK ABRAMSON/BLOOMBERG NEWS
Fairshake built its war chest through both cash and cryptocurrency donations. Phil Potter, the former chief strategy officer at crypto exchange Bitfinex, donated 33 bitcoins to the PAC last summer, equivalent to about $1 million. Those tokens were sold for cash, a Fairshake spokesman said.
To date, Fairshake said it has spent $25 million in the current election cycle. Earlier this year, it unleashed its biggest spending spree to date, aimed at defeating Katie Porter, a California congresswoman who launched a Senate bid. The group deployed $10 million on ads against Porter, a beloved figure among many liberals and a critic of how much energy consumption bitcoin requires.
The ads by Fairshake focused on topics that resonate with voters more widely, claiming Porter took cash from “big banks, big pharma and big oil,” not on Porter’s crypto stance. Porter later lost the primary.
Porter said that Fairshake isn’t engaging in genuine dialogue with candidates, and that the group is just trying to scare elected leaders into accepting their agenda.
It is unclear to what degree Fairshake’s efforts affected the outcome of the race. But the crypto industry is increasingly open about its desire to influence campaigns.
Stand With Crypto, a nonprofit spun off from Coinbase, recently announced the creation of its affiliated PAC. It also grades various politicians. President Biden, whose administration has waged a crackdown on crypto, got an “F.”
Meanwhile, presidential candidate Robert F. Kennedy Jr. won better marks after calling crypto a “bulwark against government and corporate expansion” at a conference last year. His grade from the group: an “A.”
