A new report has raised alarm over the growing influence of cryptocurrency firms in American politics, warning that deregulation under Donald Trump’s administration poses “profound risks” to financial stability and public trust.
The Center for Political Accountability (CPA), a nonprofit advocating for corporate political transparency, released the report, highlighting concerns about unchecked corporate spending and the increasing political influence of crypto companies.
“The aggressive push for deregulation, combined with opaque and unaccountable political contributions, has not only raised red flags among regulators but also eroded investor confidence and public trust in the long-term viability of these companies,” the report states.
Crypto Firms Boost Political Spending
According to the CPA, cryptocurrency companies spent over $134 million on political contributions during the 2024 election. Following Trump’s victory, major crypto firms such as Kraken and Coinbase each donated $1 million to the Trump Inaugural Fund.
As Trump assumed office, the Securities and Exchange Commission (SEC) swiftly dropped lawsuits against both Kraken and Coinbase. Previously, the SEC had accused Kraken of operating as an “unregistered securities exchange.” The decision came after the departure of SEC Chair Gary Gensler, who was appointed under Joe Biden and had been a strong advocate for crypto regulation.
Caroline Crenshaw, another regulator known for her critical stance on crypto, was also set to serve a second term but is now being replaced by the Trump administration.
Influence on Elections and Policy
Bruce Freed, CPA’s president, noted the significant impact of cryptocurrency money in recent elections, stating: “Take a look at some of the candidates who went down where there was heavy crypto spending.”
He pointed to the defeat of progressive representative and crypto skeptic Katie Porter in California’s Senate primary, where Adam Schiff, a more crypto-friendly Democrat, emerged victorious. Similarly, Ohio’s Sherrod Brown, an incumbent Democrat and chair of the Senate Banking Committee, lost to Bernie Moreno, a Republican with strong ties to the crypto industry.
The CPA report also highlights how the Trump administration’s stance on cryptocurrency has rapidly evolved. In recent weeks, Trump announced plans to establish a “crypto strategic reserve” to support the industry, calling it a move to counter “corrupt attacks by the Biden administration” and solidify the US as the “Crypto Capital of the World.”
Executive Action and Potential Conflicts
Last Thursday, Trump signed an executive order establishing the reserve. The next day, he hosted a White House Cryptocurrency Summit, followed by a reception held by Coinbase. His appointment of David Sacks, a prominent crypto investor, as the administration’s “crypto czar” has further intensified concerns.
The report notes that while Sacks has reportedly divested his personal crypto holdings, his continued partnership in an investment firm that could benefit from government-backed crypto purchases raises ethical questions.
“This specter of impropriety does nothing to assuage concerns about the pay-to-play nature of cryptocurrency,” the CPA authors wrote.
Global Implications and Warnings
The CPA report warns that the political entanglement of cryptocurrency is not unique to the US, citing a recent scandal in Argentina. Right-wing President Javier Milei promoted a cryptocurrency token called $Libra, which lost its entire $4.6 billion market value within hours. Following widespread outrage, opposition parties filed over 100 fraud complaints, leading to a judicial investigation and calls for Milei’s impeachment.
Ben Schaffzin, CPA assistant director of research and the report’s primary author, said the Argentine crisis should serve as a cautionary tale for the US. “Preaching this stuff from the top, from an executive that really doesn’t understand the mechanisms of crypto and how risky it is to ordinary consumers who don’t know the pitfalls in this product, is extremely dangerous,” he said.
As the crypto industry continues to gain political traction, concerns over regulatory rollbacks and potential financial instability remain at the forefront. Critics argue that without proper oversight, the risks associated with cryptocurrency could have far-reaching consequences for both investors and the broader economy.
