In a year marked by significant upheaval in the cryptocurrency sector, American politicians from both sides of the aisle are increasingly embracing digital currencies, despite widespread public skepticism. This surge in political support for crypto comes as the industry faces a series of legal challenges and bankruptcies that have severely tarnished its reputation.
Cryptocurrencies, which were once touted as the future of finance, have been hit with numerous setbacks over the past year. High-profile bankruptcies, criminal convictions, and ongoing legal disputes have dominated headlines, casting a shadow over the industry’s future. Yet, in an unexpected twist, the political world seems more eager than ever to align itself with digital assets.
Prominent among the cryptocurrency supporters is Rep. Ro Khanna (D-Fremont), who, along with 13 other Democratic lawmakers, recently urged the Democratic National Committee (DNC) to adopt a more favorable stance on digital assets and blockchain technology. Their letter to the DNC boldly claimed that these technologies would play a crucial role in securing electoral victories across the country, a notion that many experts find difficult to substantiate.
Meanwhile, some politicians have made dramatic shifts in their views on crypto. Eric Hovde, a Wisconsin Republican running for the U.S. Senate, once dismissed the crypto market as “insanity,” questioning the value of assets that lack tangible backing. However, Hovde has since reversed his stance, recently declaring his support for decentralized finance and Bitcoin, earning him the endorsement of the industry lobby group Stand with Crypto.
Even former President Donald Trump, who previously labeled Bitcoin a “scam,” has joined the ranks of crypto advocates. In a keynote speech at the Bitcoin 2024 conference in Nashville, Trump vowed to fire SEC Chair Gary Gensler—a known critic of cryptocurrency—should he return to the presidency. He also pledged to create a national “strategic reserve” of Bitcoin, a proposal that economists have widely dismissed as impractical.
The allure of cryptocurrency has also reached Vice President Kamala Harris’s campaign, which has reportedly sought to mend fences with leading crypto firms after tensions arose due to Gensler’s regulatory crackdowns and a lukewarm reception of crypto within the Biden administration.
This wave of political support is largely the result of an aggressive lobbying campaign by cryptocurrency advocates, who have poured significant amounts of money into political coffers. The Fairshake campaign fund, the leading financial supporter of pro-crypto candidates, has reported contributions totaling nearly $203 million as of June 30. Among the beneficiaries of this largesse is Rep. Patrick McHenry (R-N.C.), who has championed legislation aimed at loosening regulatory oversight of cryptocurrencies. Despite announcing his retirement from Congress, McHenry has received over $126,000 from Fairshake, underscoring the industry’s influence in Washington.
The crypto lobby has also been successful in downplaying the declining interest in digital currencies among the American public. While a poll commissioned by Coinbase claimed that 52 million U.S. adults own crypto, a more credible survey by the Federal Reserve found that only 7% of adults had invested in cryptocurrency in 2023—a significant drop from previous years. Furthermore, the Fed’s data revealed that only 1% of adults had used crypto for transactions, highlighting the limited real-world utility of these digital assets.
Despite the dwindling interest, the crypto industry continues to push its agenda, seeking to rewrite regulations in its favor. Critics argue that this is a dangerous move, as it could leave ordinary Americans vulnerable to financial fraud and exploitation. As Trump once said, Bitcoin and other cryptocurrencies often operate in a “scam”-ridden environment, a sentiment echoed by Gensler, who has called out the industry’s “record of failures, frauds, and bankruptcies.”
As the 2024 election approaches, the crypto industry’s political influence is expected to grow, raising concerns about the impact of this money on American democracy. With millions of dollars at stake, the debate over cryptocurrency regulation is likely to intensify, with ordinary citizens bearing the brunt of any misguided policy shifts.
