The cryptocurrency industry has significantly increased its political donations in response to growing regulatory challenges and skepticism in Washington, the Financial Times reported.
The strategy highlights an escalation in the crypto sector’s engagement with political processes in an effort to shape the narrative and policies surrounding digital assets.
Pro-crypto legislation
Key players in the cryptocurrency sector, such as Coinbase, Circle, and a16z — Andreessen Horowitz’s cryptocurrency investment arm — are channeling more resources toward supporting pro-cryptocurrency legislators and swaying pending bills in Congress.
The three firms recently contributed $78 million to Fairshake, a federal super Political Action Committee (PAC). The super PAC can accept unlimited funds from corporations and individuals and focuses on advocating for pro-cryptocurrency leadership.
Coinbase chief policy officer Faryar Shirzad said the initiative aims to “depoliticize crypto” and foster a more balanced public debate on the benefits and challenges of digital assets.
According to the report, the crypto industry’s political spending has seen a significant increase. Coinbase is set to spend around $4 million on lobbying this year, while Circle has already spent $760,000 since 2021.
Heightened scrutiny and concerns
This escalation in political donations follows heightened scrutiny of cryptocurrencies, especially in the wake of legal troubles facing companies like Binance and the arrest of FTX’s former CEO, Sam Bankman-Fried.
Senator Elizabeth Warren has raised concerns about cryptocurrencies, linking them to national security risks and illegal activities. She, along with other lawmakers, has been pushing for tighter regulations on the crypto industry.
However, the industry’s current lobbying efforts face substantial challenges as recent scandals have only served as further fodder for traditional financial institutions and regulators in their criticism of cryptocurrencies.
Senator Roger Marshall supports Warren’s bill for stricter anti-money laundering measures within the crypto sector, advocating for the same regulatory standards as traditional banking.
With the 2024 elections approaching, the crypto industry’s political activities are intensifying.
Orlando Cosme, founder of OC Advisory, told the FT that a Democratic victory in the elections could result in significant regulatory hurdles for cryptocurrencies. This prospect is driving the industry’s proactive political engagement to ensure the election of crypto-friendly candidates.