Crypto’s Influence in Washington: An Analysis
Cryptocurrency, once hailed as a game-changer offering privacy and financial freedom, has endured a series of scandals resulting in a tarnished reputation. The industry swiftly rose to prominence in 2017 during a profitable surge only to plummet in 2018 during the infamous “crypto winter.” High-profile cases of fraud against traders and investors shook the public’s trust in this largely unregulated market.
The downfall of Sam Bankman-Fried, the founder of the FTX cryptocurrency exchange, exemplified the industry’s woes. Bankman-Fried’s 25-year prison sentence for defrauding customers and misusing funds underscored the rampant corruption within the sector. This revelation prompted industry insiders to strategize a comeback by leveraging their financial clout to influence Congress. Three super PACS, operating under the benign names of Defend American Jobs, Fairshake, and Protect Progress, poured over $265 million in the 2024 election cycle to promote candidates sympathetic to relaxing cryptocurrency regulations.
Significant victories were racked up even before the elections. Fairshake’s $10 million investment in boosting Adam Schiff, a crypto industry ally, in the Senate primary yielded critical success. Schiff, favored by the crypto industry, overcame progressive opponent Katie Porter, known for her staunch anti-corporate stance. The crypto-backed groups’ substantial financial backing helped tip the scales in various primary races across the country.
Campaign finance records reveal that cryptocurrency contributions have accounted for 15 percent of corporate political donations since the Citizens United ruling ushered in an era of corporate influence in politics. This substantial investment underscores the industry’s growing influence on Washington’s policymakers. Politicians, wary of antagonizing a powerful financial ally, increasingly adopted more crypto-friendly stances as the 2024 elections loomed large on the horizon.
Even President Donald Trump, once a vocal critic of cryptocurrency, pivoted towards becoming its ardent supporter in the run-up to the 2024 elections. Embracing crypto as a cornerstone of his campaign, Trump accepted sizable bitcoin donations and appointed industry-friendly personnel to regulatory bodies. Kamala Harris, too, courted the crypto industry for financial backing, leveraging her ties with wealthy industry players to fuel her campaign.
The 2024 elections marked a watershed moment highlighting the cryptocurrency industry’s ascent as a formidable player in the American political landscape. Politicians across party lines maneuvered to align themselves with the industry, recognizing its growing influence and deep pockets. The industry’s strategic investments in key races underscore its expanding clout and its ability to shape policy decisions in Washington for years to come.
