Crypto lobbyists are busy preparing for the 2024 election
For the 2024 US presidential election, cryptocurrency is probably very low on the list of priorities for most voters. Domestically, there are many important issues like abortion, student loans, AI, immigration, social media regulation, and healthcare costs. On foreign policy, there are multiple military conflicts vying for people’s attention: Russia vs. Ukraine, Israel vs. Palestine, or China vs. Taiwan – to name just a few.
Nevertheless, while crypto is probably not a deciding issue for most, there is a small yet curiously growing Bitcoin maximalist community of single issue voters.
Crypto broadly has also attracted some national attention – mostly due to the total collapse of the gargantuan, $32 billion FTX and the millions of US customers it harmed.
Crypto also gained mainstream press from celebrity scandals like Kim Kardashian, Logan Paul, Soulja Boy, Katy Perry, DJ Khaled, Austin Mahone, Floyd Mayweather, Tom Brady, Gisele Bündchen, and Larry David. All of these celebrities promoted crypto assets that are now nearly worthless.
Crypto promoters earned a 10X since the 2020 election
Crypto is attracting more attention this election season than ever before, yet mostly for the wrong reasons. After all, the market capitalization of crypto has increased 1,000% since the last US presidential election. With their newfound gains, crypto millionaires are happy to throw their weight – and checkbooks – around Washington DC.
For example, someone trolled Elizabeth Warren by sending a request to her office to have a flag raised over the U.S. Capitol building in honor of Satoshi Nakamoto as part of the Capitol Flag Program.
Coinbase alone spent $2.16 million on lobbying during the first three quarters of 2023. Foris DAX also funded lobbying by the businesses and organizations it backs, including the Blockchain Association.
According to Blockchain Association CEO Kristen Smith, its lobbying included efforts to “bridge the education gap” among policymakers and “build a commonsense regulatory framework.”
The biggest crypto lobbyist, FTX, is bankrupt
Several political candidates have been publicly embarrassed by revelations that they either took direct or indirect donations from FTX founder Sam Bankman-Fried or an FTX-funded PAC. A criminal conviction proved that Bankman-Fried stole FTX customers’ money around the time he paid millions of dollars to lobbyists. Bankman-Fried made no secret of backing crypto-friendly Democratic candidates, for example.
Those millions from FTX and Bankman-Fried have, of course, dried up since FTX went bankrupt. Bankman-Fried had previously spent $40 million to influence the 2022 midterm elections with mixed results. However, that does not mean that crypto lobbyists have gone away.
Even with FTX money gone, crypto lobbyists have tried to keep working. They kickstarted a bill that would have provided a regulatory framework around so-called stablecoins. The collapse of Terraform Labs and its multi-billion dollar algorithmic stablecoin UST highlighted the risks surrounding stablecoins. Over the years, Protos has covered hundreds of instances of various stablecoins deviating from their intended $1 peg.
In response, giant stablecoin issuer Tether got involved in Washington DC itself. It spent $760,000 on lobbying during the first three quarters of 2023. This is a negligible expense given that its eponymous stablecoin tether (USDT) has a market cap exceeding $110 billion — the world’s third-largest crypto asset.
Read more: Here’s what the biggest stablecoins spent on lobbying in the US
Cheering for the understaffed, crypto-friendly CFTC
Crypto lobbyists also moved to displace authority from the well-staffed SEC to the drastically smaller and more crypto-friendly CFTC. Bills that would “better define” the responsibilities of the SEC regarding digital assets advanced in committees in December 2023 thanks in large part to crypto lobbyists’ efforts.
For years, pro-crypto lobbyists have cast doubt on the SEC and characterized the CFTC versus SEC jurisdictional overlap as a tug of war between equally competent, staffed, and effectual regulators. They also drum up immense media attention for the SEC’s rare losses in court against crypto defendants. These two lines of lobbying and public relations work help to keep politicians distracted from the overwhelmingly victorious track record of the SEC against crypto promoters who violate securities laws.
“It’s just been a busy war,” Coinbase Chief Policy Officer Faryar Shirzad while discussing the bills and Coinbase’s multi-million-dollar lobbying efforts.
Crypto lobbyists also have not relented in funding Political Action Committees (PACs) that support crypto-friendly candidates. Fairshake raised $78 million to support pro-digital asset candidates, for example, from businesses like Coinbase, Binance, Ripple, and Andreessen Horowitz (a16z).
Moreover, crypto lobbyists are not limiting their efforts to influencing candidates running for Congress. The Chamber of Digital Commerce, DeFi Education Fund, and even Senator Cynthia Lummis sent amicus briefs calling for the dismissal of the SEC’s case against Coinbase to the federal court presiding over that case.
The Blockchain Association and Crypto Freedom Alliance of Texas recently filed a lawsuit alleging that the SEC violated rules for creating new regulations when it expanded its definition of “dealer” to include potentially relevant digital asset activity.
Read more: Binance ordered to pay $2.7B to CFTC, former chief to pay $150M
Politicians talk crypto now
Even politicians themselves have tried to make crypto a matter of some national policies. Senator Elizabeth Warren warned of US adversaries like Iram outcompeting US-based Bitcoin miners. Tertiary presidential candidate Robert F. Kennedy announced a plan for digital assets that included using bitcoin to somehow partially back the US Dollar and eliminating some capital gains taxes involving sales of bitcoin.
Although it is unclear whether crypto lobbyists have personally communicated with Donald Trump, the leading Republican candidate recently changed his tune on bitcoin. Previously, he called bitcoin a scam.
More recently, however, Trump called crypto an “additional form of currency.” Part of his change in tune could be explained by the millions in ETH he received by selling questionable NFTs, sneakers, and event tickets.
Read more: Tucker Carlson interview bumps price of ridiculous Trump NFTs
While some politicians are unlikely to change their negative stance toward digital assets so close to the November 2024 presidential election, others seem at least open to learning more about it. Lobbyists are certainly ready to answer questions about digital assets – perhaps over cocktails at Hillwood, the Meridian Ball, or any of Washington DC’s other decadent galas.
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