Why the Crypto Industry Spent Millions on the US Midterm Elections
The cryptocurrency industry has spent millions of dollars in the US midterm election races amid a year of heavy losses and turmoil in the sector, which hopes to gain momentum among lawmakers as Congress debates tightening regulation of digital assets.
Crypto evangelists see 2023 as an important regulatory year, and Congress is expected to advance legislation on digital assets and stablecoins, a form of cryptocurrency linked to the US dollar. Crypto companies are eager to support industry-friendly political candidates.
The election comes at a time of turmoil in the crypto industry. The price of Bitcoin is down almost 70 percent from its peak, investors are more concerned about the risk of crypto assets and on Tuesday, the crypto giant Binance partially agreed to buy a non-US unit of FTX to help exchange rival to cover “the liquidity crunch.”
Who in crypto is spending money in the midterm elections?
FTX CEO Sam Bankman-Fried has far outdone everyone else in the crypto industry. His nearly Rs 40 million (roughly Rs. 330 crore) contributions to campaigns this election cycle make him the sixth largest donor in the US, according to OpenSecrets’ largest list of individual donors.
Most of his spending was to support Democrats, according to OpenSecrets.
The deal with Binance announced by Bankman-Fried on Tuesday marked a quick turnaround in fortunes for the crypto entrepreneur.
Ryan Salame, CEO of subsidiary FTX, was the 14th largest donor on the list, giving more than $23.6 million (roughly Rs. million). Attorney. Alex Mooney, Republican of West Virginia.
FTX did not respond to a Reuters request to confirm those figures.
Skybridge, the digital asset investment management firm founded by former Trump White House communications director Anthony Scaramucci, donated $100,000 (roughly Rs. 800 crore) to the Crypto Innovation super PAC this year, as did Scaramucci himself.
“The people have spoken: they believe in the promise of blockchain technology, they want more financial inclusion, and they want policymakers to listen. That’s why, at SkyBridge, we’ve made such a big bet on cryptocurrency – and just as importantly, on the underlying blockchain technology,” said a Skybridge spokesperson.
Which candidates earn money in crypto?
Lawmakers who were interested in drafting crypto laws, as well as influential committee leaders, received cash from crypto-related PACs.
Two of the largest public crypto companies in the United States, Coinbase and Robinhood, also have PACs that have spent over $11,000 (approximately Rs. 8,93,700 crore) and $44,000 (approximately Rs 35,74,900 crore) respectively till the middle of the year. election, according to FEC data and verified by companies.
Coinbase, Robinhood and the industry trade group Chamber of Digital Commerce all had their PACs dedicated to Patrick McHenry, FEC records show. As the top Republican serving on the House Financial Services Committee, McHenry is likely to become its chairman if Republicans win control of the House of Representatives. The Chamber of Digital Commerce did not respond to a request to confirm its contributions.
Crypto Innovation super PAC has spent at least $167,000 (roughly Rs. 1.35 crore) supporting McHenry’s re-election campaign by paying for advertisements and direct mail campaigns. The group did not respond to a request to confirm its contributions.
Coinbase, the Chamber of Digital Commerce and the crypto-focused HODLpac was given to Senator Ron Wyden, the Democratic chairman of the Senate Finance Committee, according to FEC records. Crypto Innovation PAC spent more than $356,000 (about Rs. 2.90 crore) in private expenses supporting Senator John Boozman, the top Republican on the Senate Agriculture Committee.
What does the crypto industry want in return?
Crypto firms may be hoping to influence regulations as policymakers push for digital asset legislation in the coming months.
McHenry and Maxine Waters, the Democrat who now chairs the House Finance Committee, are in discussions about a bipartisan stablecoin bill. Although the details have not yet been finalized, many analysts consider stablecoins to be the easiest crypto issue for lawmakers to address.
Crypto companies like Circle want lawmakers to create a framework for stablecoins to help fuel the industry and consolidate consumer protections. Currently, there is no regulatory body overseeing stablecoins.
Boozman and Stabenow, along with Senators Cory Booker and John Thune, introduced the Digital Consumer Protection Act of 2022, a bipartisan bill that would give more authority to the CFTC to regulate cryptocurrency.
Others in crypto, such as Ryan Selkis, founder and CEO of crypto market intelligence firm Messari, have expressed concern that the bill will pose an existential threat to decentralized finance (DeFi), which requires expanded crypto exchanges to register with Commodities Futures Trading Commission (CFTC). )).
Proponents of DeFi in particular, and crypto companies more broadly, are likely hoping that their campaign contributions will help them make their case to the winning candidates.
© Thomson Reuters 2022
