Economy
‘Everyone’s
mad': Inside crypto’s civil war over the 2024 elections
Crypto
industry players are at odds over how to influence races for the White House
and Congress.
“There's a tremendous amount of emotion right now,”
Blockchain Association CEO Kristin Smith said. “There's an industry strategy,
and then there's somebody's individual strategy — and those are sometimes maybe
not fully aligned.” | Anthony Kwan/Getty Images
By Eleanor Mueller
09/08/2024 12:00 PM EDT
https://www.politico.com/news/2024/09/08/inside-cryptos-civil-war-00176227
The cryptocurrency industry is exerting more sway than ever
over U.S. politics.
But behind the scenes, cracks are emerging between its left
and right flanks over how to influence who will be president and control
Congress next year.
Democratic crypto lobbyists, executives and investors say
the industry is at risk of leaning too far right as its leaders come out in
force for GOP presidential nominee Donald Trump, who is promising policies that
would boost digital asset firms. Their Republican counterparts say engaging
with Democratic nominee Kamala Harris and backing her party’s down-ballot
candidates risks isolating long-time allies in the GOP, with little to no
guarantee it will pay off. The Biden administration has taken a skeptical approach
to crypto trading, and it’s unclear what Harris would do.
The internal dispute has spilled into view as the industry’s
nearly $170 million super PAC effort begins to spend on key races across the
country and some crypto advocates seek inroads with Harris. Democratic
megadonor Ron Conway abandoned the crypto super PAC network, known as
Fairshake, after it announced it would spend millions to unseat Sen. Sherrod
Brown in Ohio. GOP lawmakers, including NRSC Chair Steve Daines of Montana,
expressed frustration to crypto executives when Fairshake decided to back Democratic
Reps. Ruben Gallego of Arizona and Elissa Slotkin of Michigan for Senate races
in their battleground states, said a person briefed on the talks who was
granted anonymity to discuss private conversations.
“There’s a tremendous amount of emotion right now,”
Blockchain Association CEO Kristin Smith said. “There’s an industry strategy,
and then there’s somebody’s individual strategy — and those are sometimes maybe
not fully aligned.”
Nearly a dozen crypto advocates familiar with the conflict
said in interviews that the rising tension is creating new hurdles for the
industry as it tries to advance a regulatory overhaul on Capitol Hill, which
was already a long shot thanks to election-year politics and limited floor
time.
“Since the [Ohio super PAC] announcement, it’s been a mess,”
said one congressional aide granted anonymity to speak candidly. “Democrats are
mad, Republicans are mad, everyone’s mad.”
It’s not unusual for election-year dynamics to impede
bipartisan momentum. But it is notable for an industry itself to be so divided
over how to proceed. Even top executives at failed crypto giant FTX contributed
huge sums to both parties.
“You have about the same number of Republicans as Democrats
as independents,” said a crypto lobbyist granted anonymity to speak candidly.
“That’s just a unique industry, and it’s causing conflict.”
Crypto’s biggest political campaign funders are becoming
increasingly outspoken about their personal perspectives.
Andreessen Horowitz co-founder Marc Andreessen, whose
venture capital firm is a major crypto backer, recently declared Trump “the
right choice” for “the future of our business.” Cameron and Tyler Winklevoss,
co-founders of the digital asset firm Gemini, said they would donate $1 million
each to Trump.
“The vitriol coming from right-of-center, from very
prominent CEOs and investors, has caused a lot of consternation on the left,”
said Jonathan Padilla, a crypto entrepreneur who helped launch Crypto4Harris in
a bid to rally support for the vice president.
The tensions are spreading to Capitol Hill, potentially
jeopardizing a surge in bipartisan support this year for legislation that would
establish crypto-friendly regulations.
Since 71 House Democrats helped 208 Republicans pass a
crypto overhaul in May, the issue has taken on a more partisan tinge.
Weeks before he became Trump’s running mate, Sen. JD Vance
of Ohio began circulating a crypto regulation proposal that’s unlikely to get
traction across the aisle. Senate Agriculture Chair Debbie Stabenow (D-Mich.)
scrapped a committee vote on her own crypto bill after she couldn’t get GOP
buy-in.
Some crypto advocates are now floating the idea that the
industry should curb its push for further votes until Trump is elected and
Republicans gain seats in the Senate. Though top Democrats like Majority Leader
Chuck Schumer have shown openness to the crypto world’s concerns, the idea is
that Republicans will be more reliable allies.
“If you think Donald Trump is going to win the election, and
particularly if you think the Senate is likely to be under Republican control,
why negotiate against yourself?” said a crypto lobbyist granted anonymity to
discuss the thinking.
Democratic crypto lobbyists and lawmakers warn that it’s
short-sighted to go all-in on the GOP. They’re working to make inroads with the
Harris campaign and remain hopeful that she’d pursue more supportive policies
than has Biden, whose regulators have had fierce clashes with digital asset
firms.
“Crypto advocates who are also reaching out to Harris don’t
believe in putting all the eggs in one basket or in one party,” Crypto Council
for Innovation CEO Sheila Warren said. “And I think that is seen as being
courageous, or pointless, which is a sad state of affairs, but that’s where we
are.”
The concern about burning bridges on the left escalated
after the crypto super PAC network announced plans to spend $12 million to
support Brown’s Republican opponent Bernie Moreno in Ohio’s U.S. Senate race.
Brown, if re-elected, would likely chair the Senate Banking Committee next year
and have a major say over the future of crypto regulation, making the move a
risky bet.
“Anyone who cares about the future of crypto should want
this issue to stay in the bipartisan lane,” said Rep. Wiley Nickel, a North
Carolina Democrat who is trying to connect the Harris campaign with crypto
industry players. “Anything less would poison the well for a decade.”
Pro-crypto Republicans say it’s naive to hold out hope for
Democrats. The party is home to some of the industry’s biggest foes, including
Securities and Exchange Commission Chair Gary Gensler and Sen. Elizabeth Warren
of Massachusetts, who warn that crypto trading poses perils to consumers and
the financial system. Harris has no clear record on the issue.
“I am very concerned that many candidates are changing their
tune on the subject for political gains,” said Sen. Cynthia Lummis, a Wyoming
Republican who’s a prominent crypto booster. She says she’s “very skeptical of
Harris’ alleged change of heart.”
Fairshake, the crypto super PAC network, has spent large
sums on Republicans and Democrats, as it works to secure allies and derail
critics. But that doesn’t mean either party is happy. The group, which said it
has spent about $75 million of the $169 million it’s raised, declined to
comment for this story.
Some Democratic donors, including the tech billionaire
Conway, have warned that the network’s spending is more broadly geared toward
winning GOP majorities in Congress.
Republicans are likewise growing annoyed by the super PACs’
support for Democrats, and some see it as a betrayal after years of support.
Among them is Daines, the Montana lawmaker leading the GOP’s effort to win back
the Senate.
“You’re pissing off the people who have promoted the
industry, for a political party that has been skeptical at best,” said a GOP
strategist granted anonymity to share private discussions. “There’s been
conversations [among Republican lawmakers] about, Do you think twice before
having a meeting with people in the crypto industry?”
Declan Harty and Jasper Goodman contributed to this report.
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