How Crypto Money Took Over American Politics: Report

Cryptocurrency is now a player in the US political process and is evident in the 2024 election. Crypto leaders, including people from Coinbase, Ripple, and the venture capital firm Andreessen Horowitz, decided in the fall of 2023 to pool their resources and establish a major political spending program.

The shift began in the last quarter of the year 2022 after the crash of FTX, a $32 billion crypto exchange. During this period, the sector was criticized as the FTX founder was charged, and many politicians distanced themselves from the sector. For Faryar Shirzad, the Chief Policy Officer at Coinbase, this was crucial. Nonetheless, Shirzad saw the situation as a chance for the crypto companies to push some change.

Crypto’s New Political Strategy

Coinbase Ripple and Andreessen Horowitz understood that traditional lobbying had to be increased and stepped up. Politicians, for the most part, were either sceptical or outright against the concept of crypto, which left the industry’s future uncertain. Shirzad and other policymakers in the industry understood that to negotiate these latest political imperatives, they needed a radical approach. According to Shirzad,

“We were dealing with a political problem and to deal with that political problem, we needed a political solution.”

That solution came in the form of a super PAC: a political committee which could raise and expend funds to influence the political process, but could not contribute to a particular candidate or candidate’s campaign. This was quite an aggressive move, bearing in mind that there was a high risk of companies experiencing the wrath of the public and the government when they interfere with elections. But for the crypto leaders, it was to some extent a conscious decision. Even more pressure from regulators such as the SEC to enlighten the industry chiefs that the advantages outweighed the disadvantages.

By the end of 2023, the super PAC known as Fairshake, which was formed by Coinbase, Ripple, and Andreessen Horowitz, had been able to mobilize $85 million, a record that has not been seen with any other corporate PAC. When the 2024 election cycle started, the PAC had nearly $300 million in its fundraising pool. This new financial muscle meant that Fairshake could now get involved in races at all levels of government, from local congressional seats right up to Senate seats, and could even influence key regulatory votes in the capital. 

Crypto’s Impact on Elections

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The PAC’s first big moment arrived in February 2024 when the PAC poured more than $10 million into defeating Rep. Katie Porter (D-CA) in the California Senate race. However, Porter had not been a vocal opponent of crypto, and her connection to Warren, who is a known critic of crypto, only added to the pressure.

With the election year, the impact of Fairshake continued to rise. The super PAC had begun changing the political landscape by early May 2024. The PAC’s financial muscle was on full display during the voting on two bills related to cryptocurrencies. The first one was the FIT21 bill, which sought to provide a legal structure for the operation of cryptocurrencies in the market, and the second one was the elimination of the SEC’s SAB 121 rule, which made it almost impossible for banks to get involved with cryptocurrencies. 

The 71 House Democrats, including Speaker Nancy Pelosi and other key members of the Democratic caucus, voted against the president in favour of the FIT21 bill. In the Senate, all 52 Republicans, together with 12 Democrats, including the Senate Majority Leader, Chuck Schumer, voted in favour of repealing the SEC’s SAB 121 rule. 

The chances for Fairshake did not end with the regulatory votes. The PAC had grown to play a significant role in Congressional races by the year 2024, when the general elections were being held. It concentrated on promoting politicians who are supportive of crypto ideas, including some Democratic representatives who had negative sentiments towards the industry before. Perhaps the most high-profile of these was Elissa Slotkin, a Democratic representative from Michigan, who had originally been sceptical of digital currencies but changed her mind after being endorsed by Fairshare.

Crypto’s Political Power Surge

The PAC’s biggest victory was in November 2024, when it poured $40 million into ousting Sen. Sherrod Brown (D-OH), who was an early and vocal opponent of cryptocurrencies. Brown’s departure was a significant setback for the anti-crypto lobby in Washington and further entrenched Fairshake. 

However, the increase of digital money in politics brought a question to the future of American democracy. Some critics were concerned that the financial muscle of firms such as Coinbase and Ripple could only deepen corporate influence in Washington and reduce the power of the general electorate. 

When the 2024 election cycle closed, it was clear that crypto had made its mark on the American political system. Whether this new power will be beneficial in the future or not, is still impossible to determine. In the same way that Bitcoin and other digital assets have changed the way players can spend money in the game, its effects will be felt for some time.

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