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The cryptocurrency industry is trying to elect political allies. The stakes couldn’t be higher.
Crypto companies are fighting for survival after a regulatory crackdown. Their latest strategy: spend 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 critics. A trio of super political action committees have together raised more than $85 million, one of the largest sums among PACs campaigning in the 2024 elections.
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Fairshake, along with two affiliated super PACs, raised the money from an A-list in the industry, including cryptocurrency exchange Coinbase Global and Cathie Wood’s ARK Invest. The thrust is powered by a increase in cryptocurrency prices.
“This is the first time we really have all the pieces in place,” said Kristin Smith, chief executive of the Blockchain Association, an industry group.
Kristin Smith, CEO of the Blockchain Association. – Eric Lee/Bloomberg News
Wealthy investors and big corporations have long used campaign donations and lobbyists to gain influence in Washington. What distinguishes the cryptocurrency industry’s push this year is that its ability to continue operating in the United States is at stake. With regulators filing civil lawsuits alleging that the industry is in conflict with securities laws and Prosecutors file criminal chargessome companies they looked abroad to grow or move out completely.
Earlier this month, former President Donald Trump was asked what he would do if re-elected to stop crypto companies from leaving the United States
“If we want to embrace it, then we have to leave them here,” Trump said in support of the industry at Mar-a-Lago, his social club and part-time residence in Florida.
Fairshake has not yet weighed in on the presidential election.
Previous attempts by cryptocurrency supporters to influence elections have not been as well-funded. In 2022, FTX founder Sam Bankman-Fried contributed to a PAC which ultimately raised $12 million. A federal judge Bankman-Fried convicted to a quarter-century in prison for several fraud cases earlier this year.
This cycle is different. The industry banded together after a series of lawsuits by the Securities and Exchange Commission. Crypto firms have attracted more lobbyists, working to convince lawmakers that Bankman-Fried’s FTX it is not indicative of the industry.
Phil Potter, former chief strategy officer at Bitfinex, donated 33 bitcoins to Fairshake last summer, equivalent to about $1 million. – Christopher Goodney/Bloomberg News
Fairshake, launched late last year, led the efforts. The group brings together major players in the crypto industry, including the parent company of cryptocurrency exchange Kraken, venture capital firm Andreessen Horowitz, and stablecoin issuer Circle Internet Financial.
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Efforts so far have focused on Congress. The industry is backing legislation that would regulate issuers of stablecoins, or dollar-pegged cryptocurrencies, which would make it easier to trade in and out of the market. The legislation would set rules for issuers, including requiring tokens to be fully backed by reserves.
Fairshake built its war chest through both cash and cryptocurrency donations. Phil Potter, former chief strategy officer of cryptocurrency exchange Bitfinex, donated 33 bitcoins to the PAC last summer, equivalent to about $1 million. Those tokens were sold for cash, a Fairshake spokesperson said.
Brian Armstrong, CEO of Coinbase Global, spoke at the Stand With Crypto rally in March. -Mark Abramson/Bloomberg News
To date, Fairshake said it has spent $25 million in the current election cycle. Earlier this year, he unleashed his biggest spending spree to date, aimed at defeating Katie Porter, a California congresswoman who has launched a Senate bid. The group has invested $10 million in ads against Porter, a figure beloved by many liberals and a critic of bitcoin’s energy consumption.
Fairshake’s ads focused on topics that resonate more widely with voters, claiming that Porter took money from “big banks, big pharmaceutical companies and big oil companies,” not on Porter’s position in the cryptocurrency industry. Porter later lost the primary.
Porter said Fairshake is not engaged in genuine dialogue with candidates and that the group is only trying to scare elected leaders into accepting their agenda.
It is unclear to what extent Fairshake’s efforts influenced the outcome of the race. But the cryptocurrency 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 affiliate PAC. It also ranks various politicians. President Biden, whose administration has undertaken a crackdown on cryptocurrencies, got an “F.”
Meanwhile, running for president Robert F. Kennedy Jr. got better marks after calling cryptocurrencies a “bulwark against government and corporate expansion” at a conference last year. Her grade from the group: an “A.”
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Vicky Ge Huang a vicky.huang@wsj.com