Cryptocurrencies are no longer just emerging currencies trying to find their place in the American or global economy. The crypto industry has now turned its attention to playing an influential role in U.S. politics. The goal is to establish regulatory frameworks that would create a supportive environment for the industry’s growth, helping to avoid the fallout from the significant bankruptcy crises that these companies faced in 2022 and to bolster investor confidence in the industry.
Driven by a desire to build on the successes of 2024, where Bitcoin reached its all-time high on March 13, 2024, cryptocurrency companies have actively engaged in funding U.S. elections through Political Action Committees (PACs). These PACs have not spared any effort in courting supporters from both political parties. Although they have backed Trump’s campaign, they have also flirted with Harris’s campaign, attempting to establish a loyal base in Congress and ensuring a crypto-friendly president in the White House. This has led some to speculate that the 2024 elections might be dubbed “the Bitcoin elections.”
As the economy remains a top concern for American voters—recent Gallup polls indicate that 33% of Americans consider the economy the most important issue facing the country today—and given that approximately 52 million Americans own digital currencies, it is likely that candidates’ positions on the cryptocurrency industry will become pivotal issues influencing voters’ decisions.
Increasing Momentum
The crypto sector has recently played a significant role in U.S. politics. In a joint effort by twelve cryptocurrency companies, a new PAC has been established, emerging as the top spender in the current 2024 election cycle. This effort aims to ensure the effectiveness of a growing lobby that will rally support for the industry and pass favorable legislation. The following points highlight this development:
Prominent Presence of Crypto-Funded PACs: PACs funded mainly by cryptocurrency companies have taken a leading position among election financing lobbies in the U.S. The “Fairshake” PAC, funded by crypto companies, has outpaced other long-standing PACs in U.S. politics, raising approximately $203 million by August 11, 2024. This surpasses the well-known “Make America Great Again” PAC, which gathered around $201 million. Major contributors to “Fairshake” include the cryptocurrency companies Ripple and Coinbase, as well as the company owned by entrepreneur Marc Andreessen and his business partner Ben Horowitz, which contributed about $70 million by the end of June 2024.
Allowing Campaign Financing via Cryptocurrencies: The Federal Election Commission (FEC)—the agency responsible for enforcing campaign finance laws—announced in 2014 that PACs could receive contributions in cryptocurrencies (Bitcoin). Contribution limits are determined based on the market value of the currency at the time of the donation. This decision sparked widespread debate, with some cryptocurrency opponents arguing that these currencies are too volatile and unpredictable, violating laws that set contribution limits. Additionally, the difficulty in tracking cryptocurrency sources makes them an effective weapon for foreign entities attempting to influence or manipulate electoral processes.
Increasing Impact of Cryptocurrency Issues on Voter Trends: In the 2024 presidential election marathon, candidates’ positions on cryptocurrencies have become significant voting issues. A survey conducted by the cryptocurrency exchange “Gemini” between May 23 and June 28, 2024, revealed that over one-third of American voters (37%) indicated that a candidate’s stance on cryptocurrencies would greatly influence their voting behavior. Furthermore, 73% of cryptocurrency owners, representing 21% of the American population, stated they would prioritize a candidate’s position on cryptocurrencies. Meanwhile, a poll conducted by “Harris Poll” between April 30 and May 2, 2024, indicated growing voter interest in cryptocurrencies. Thirty-two percent of voters expressed greater openness to investing in cryptocurrencies, with support for these currencies rising among voters. Twenty-three percent of voters viewed cryptocurrencies as a long-term investment opportunity, compared to 19% in a similar poll conducted by the company in late November 2023. Additionally, 47% of voters expected cryptocurrencies to be part of their investment portfolios, up from 40% in the November poll.
Significant Involvement of Cryptocurrency Companies in Congressional Primaries: Cryptocurrency companies have made concerted efforts to establish a solid footing in the U.S. Congress by supporting pro-crypto candidates in the primaries, which would later serve their interests in passing supportive legislation. Statistics from AdImpact indicate that the “Fairshake” PAC and its associated PACs, such as “Defend American Jobs” and “Protect Progress,” spent nearly $37 million on advertising campaigns for the primaries. Estimates suggest that this strategy has paid off, with pro-crypto candidates winning or anti-crypto candidates losing in 26 congressional primary races.
Efforts to Establish a Supportive Legal Framework for the Cryptocurrency Market: The passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) in May 2024 marks the most significant legislative achievement for the industry in Congress. The law, supported by 279 members of Congress, mostly Republicans, with 136 votes against, aims to divide responsibility for regulating the cryptocurrency market between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), enhancing the latter’s authority while weakening the former’s supervisory role. This led to a presidential veto from Biden, who argued that the Republican-led bill undermines the SEC’s role in setting appropriate safeguards and addressing future issues related to digital assets, many of which are securities and should be subject to strict regulations similar to those governing stocks and bonds. Although Democratic candidate Kamala Harris has not explicitly stated her position on cryptocurrencies, several Democratic lawmakers confirmed during a virtual meeting of the (Crypto4Harris) initiative, which includes digital currency supporters backing Harris on August 15, 2024, that she would pave the way for new U.S. crypto regulations. Senate Majority Leader Chuck Schumer announced during the same meeting his intention to pass comprehensive cryptocurrency legislation and turn it into law by the end of 2024.
Republican Inclination
Recognizing the importance of having a crypto-friendly ally in the White House and reforming the current regulatory environment that stifles innovation in the industry, cryptocurrency companies and PACs have lined up behind Republican candidate Donald Trump, who has pledged a series of reforms to save the industry and achieve American leadership in it. The following points highlight this trend:
Trump’s Shift from Anti-Crypto Stances: Contrary to his previous anti-crypto statements, where he asserted in 2019 that Bitcoin and other cryptocurrencies are not money and that their value is “based on thin air,” repeating these sentiments in 2021 by calling cryptocurrencies a “scam against the dollar” and predicting disaster if they were adopted, Trump reversed his stance in 2022. He launched his own line of non-fungible tokens (NFTs), which are a form of cryptocurrency, releasing three lines and selling 45,000 cards. In an interview with Bloomberg Businessweek in July 2024, he confirmed plans to launch a fourth collection, and he selected Senator J.D. Vance, known for his pro-crypto stance, as his running mate.
Trump’s Campaign Accepting Cryptocurrency Donations: On May 22, 2024, Trump’s campaign announced that it would begin accepting cryptocurrency donations, making him the first U.S. presidential candidate to accept such contributions. To this end, his campaign launched a donation page allowing all federal-level donors to contribute to PACs with any crypto assets listed on the cryptocurrency exchange “Coinbase.” Consequently, the campaign accepted popular currencies like Bitcoin and Ethereum, as well as lower-value currencies like Shiba Inu (Shib) and Dogecoin.
Trump Campaign’s Growing Cryptocurrency Contributions: By the end of June 2024, Trump’s campaign had raised $1.8 million in Bitcoin and $900,000 in Ethereum, the two largest cryptocurrencies. Most of these currencies were sold immediately for stablecoins pegged to the dollar. Contributions in Dogecoin totaled about $300, and $100 in Shiba Inu, bringing the total contributions to $3.1 million. Although this amount is small compared to the campaign’s total haul of $331 million, it is noteworthy that this sum was collected in just one month after the campaign began accepting these currencies. It also came from a handful of major contributors in the field, such as Jesse Powell, co-founder of the cryptocurrency exchange Kraken, and Tyler and Cameron Winklevoss, co-founders of the cryptocurrency exchange Gemini. Additionally, individual (ordinary) contributions amounted to 100 donations, with estimates suggesting these contributions could increase in the coming months.
Cryptocurrencies Included in the “America First” Agenda: Donald Trump has spared no effort recently to show his full support for cryptocurrencies, pledging to end Joe Biden’s campaign to undermine cryptocurrencies and support them by including them in his “America First” plan. Speaking at the “Bitcoin” conference in Nashville, Tennessee, on July 27, 2024, which attracted nearly 20,000 cryptocurrency supporters, Trump stated that these currencies will shape the future and therefore must be mined and produced in the United States to make it the global cryptocurrency capital. He also made a series of promises to support the industry, including forming a Presidential Advisory Council on the cryptocurrency industry and developing a regulatory framework organized by industry supporters. He pledged to fire SEC Chairman Gary Gensler, who described the cryptocurrency industry as the “Wild West,” a move warmly welcomed by the audience.
Support for Trump from Leading Cryptocurrency Figures: Given that the current election is seen as a critical moment for the future of the cryptocurrency industry in the country, David Bailey, CEO of BTC Inc., confirmed that the cryptocurrency sector is committed to raising more than $100 million and mobilizing over 5 million voters to support Trump’s re-election efforts. They see his strategy to make America the global cryptocurrency capital as promising, compared to Biden’s administration’s crackdown on cryptocurrency companies. Additionally, a poll conducted by the “Fairshake” PAC in mid-July 2024 revealed that 37% of Bitcoin owners had already donated to Trump’s campaign, while only 22% supported Harris.
The Reality of the Situation
While cryptocurrencies will play an influential role in the 2024 elections, the debate continues between their supporters and opponents over their impact on the future of the American economy and whether they have the potential to lead the global economy. The following points highlight this controversy:
Volatile Cryptocurrencies: Despite cryptocurrencies being viewed as a promising investment and a key future element, they remain volatile currencies without strong roots in the American economy. Additionally, their volatility, often by large percentages within days, undermines confidence in them as stable currencies capable of creating an economic future that can effectively contribute to protecting American interests.
Cryptocurrencies and Inflation: Cryptocurrency opponents fear that allowing them to become a significant part of the American economy would contribute to further fueling inflation, particularly since the rapid rise in their value has no real economic value and is more akin to speculation than investment. Critics of the Biden administration have accused it of contributing to the rise of Bitcoin by paying insufficient attention to digital currencies while at the same time undermining the value of the dollar.
Global Acceptance of Cryptocurrencies: Despite the support for cryptocurrencies in the U.S., the global market remains skeptical of their contribution to creating a new economic environment, particularly given their failure to win significant acceptance in other major economies like Europe and China. The European Union (EU) and the United Kingdom (UK) remain cautious in regulating cryptocurrencies, while China has banned cryptocurrency mining. Russia has also suspended cryptocurrencies to avoid sanctions imposed by the West due to its war against Ukraine.
Security Concerns: The cryptocurrency market faces security challenges related to illegal activities and cyberattacks, which have caused significant financial losses for investors. The relative anonymity of cryptocurrency transactions makes them attractive for money laundering, drug trafficking, and other illegal activities. As a result, cryptocurrency opponents argue that the U.S. government should prioritize regulation and law enforcement rather than promoting the industry.
Environmental Impact: Cryptocurrency mining requires substantial computational power, leading to significant energy consumption. Critics highlight the environmental impact of the industry, arguing that it exacerbates climate change and contradicts global efforts to reduce carbon emissions. This has led to calls for stricter regulations on cryptocurrency mining activities.
In conclusion, while cryptocurrencies are poised to play a significant role in the upcoming U.S. elections, they remain a controversial and uncertain element of the global economy. The debate over their potential benefits and risks will likely continue, shaping the future of the industry and its place in the American economic landscape.
