In a tumultuous year for cryptocurrency, marked by high-profile bankruptcies, legal battles, and criminal convictions, one surprising trend has emerged: politicians from both major parties are increasingly embracing digital assets, despite widespread public skepticism.
Over the past year, cryptocurrency has faced significant challenges, including the collapse of major firms and legal actions against former industry leaders. Yet, as the 2024 election approaches, many politicians see crypto as a new frontier worth exploring.
Notable among the pro-crypto advocates is Rep. Ro Khanna (D-Fremont), who recently joined 13 Democratic colleagues in urging the Democratic National Committee (DNC) to adopt a progressive stance on digital assets and blockchain technology. Their letter to the DNC optimistically suggested that these technologies could play a crucial role in securing electoral victories.
A more recent convert to the crypto cause is Eric Hovde of Wisconsin. Hovde, a GOP candidate challenging Democratic Sen. Tammy Baldwin, previously criticized the crypto market as “insanity” and lacking fundamental backing. However, Hovde has since reversed his stance, expressing strong support for decentralized finance and Bitcoin, and receiving a “Very Pro-Crypto” designation from the industry group Stand with Crypto.
The industry’s most notable endorsement came from former President Donald Trump. Once a vocal critic, calling Bitcoin “a scam” in 2021, Trump delivered the keynote address at the Bitcoin 2024 conference in Nashville. There, he promised to dismiss Securities and Exchange Commission Chair Gary Gensler, a crypto critic, if re-elected, and to commute the life sentence of Silk Road creator Ross Ulbricht. Trump also pledged to establish a national “strategic reserve” of Bitcoin, an idea lacking economic coherence.
Even Vice President Kamala Harris’ campaign is reportedly seeking a “reset” with the crypto industry, despite the Biden administration’s generally cool stance towards digital currencies.
These political maneuvers are part of a broader, well-funded campaign by crypto advocates, characterized by significant financial contributions and persuasive claims about the voter base. Crypto lobbyists assert that 52 million Americans own cryptocurrency, positioning them as a vital voting bloc. This figure, derived from a Coinbase-commissioned poll, contrasts sharply with a Federal Reserve survey indicating only 7% of adults owned crypto in 2023, equating to about 18 million people. The same survey noted a decline in crypto ownership and minimal use of crypto for transactions.
Despite the crypto industry’s aggressive lobbying, many Americans remain skeptical. A survey commissioned by Digital Currency Group revealed that a majority of voters in six key swing states hold negative views on cryptocurrency. However, the crypto lobby highlights the minority with positive views, attempting to sway political opinion.
Molly White, a noted observer of financial technology, suggests that even those who own crypto may not prioritize it as a political issue. She believes they are more concerned with broader societal and economic issues.
The influence of the crypto industry is evident in campaign contributions. The leading crypto fund, Fairshake, reported $203 million in donations as of June 30. This fund has actively supported pro-crypto candidates and opposed critics like Rep. Katie Porter (D-Irvine), who lost her Senate primary to the more crypto-friendly Rep. Adam B. Schiff. Fairshake has also backed Rep. Patrick McHenry (R-N.C.), a proponent of shifting crypto regulation away from the SEC to the less stringent Commodity Futures Trading Commission.
The bulk of Fairshake’s funds come from major crypto firms and investors, including Coinbase, Ripple, Andreessen Horowitz, and the Winklevoss twins, who have pledged further support for Trump.
As the 2024 election unfolds, the role of crypto in politics warrants close scrutiny. Despite its proponents’ claims, cryptocurrency has yet to prove its value beyond facilitating illicit activities. The industry’s campaign for favorable regulations could ultimately harm ordinary Americans, many of whom have already been affected by crypto-related scams and failures.
