Source: Culture Horizon
Translation: Hui Nuo
[Introduction] The 2024 US presidential election has come to an end. Behind Trump's "quick victory", the latest developments in money politics have received widespread attention. Statistics show that in sync with Trump's victory in the presidency, 40 of the 58 congressmen funded by the cryptocurrency industry at a cost of $130 million were also declared elected. The FairShake cryptocurrency group has become the largest super political action committee (Super PAC) in the 2024 election, raising a total of more than 200 million. Some analysts pointed out that Trump, who has shown goodwill to cryptocurrencies, has found new allies in Congress and the government. So, in this most "expensive" election, what exactly does the cryptocurrency field want to win?
This article points out that Biden's questioning and restrictions on cryptocurrencies during his tenure have caused strong dissatisfaction in the industry. In 2022, FTX, the world's third largest cryptocurrency trading platform, collapsed, and its founder was sentenced to prison for multiple crimes, including abusing customer deposits for high-risk betting and illegal political donations. In order to combat fraud, the Biden administration has imposed taxes on cryptocurrency investment income, attempted to classify more digital tokens as securities, and initiated regulatory lawsuits through the U.S. Securities and Exchange Commission (SEC). In order to reshape the regulatory landscape, they approached Trump and 58 members of Congress. During his campaign, Trump promised to protect crypto assets from excessive regulation, proposed that industry-friendly people serve as chairman of the SEC, promoted Bitcoin to become a "national strategic reserve", and declared that the United States would become a global cryptocurrency center. As soon as Trump won the election, the price of Bitcoin soared to an all-time high of more than $76,000. The political tacit understanding shown by members of Congress is even more intriguing. None of the campaign ads funded by Fairshake mentioned cryptocurrencies, but many of the candidates funded publicly stated that they would promote the development of cryptocurrencies during their term and mentioned it in their 2025 plans, even though voters in the state did not care about cryptocurrencies at all.
Many critics of the Democratic Party have compared the risks posed by cryptocurrencies to the 2008 financial crisis. With the deregulation brought about by Trump's election, people are increasingly concerned about global financial stability. At the same time, cryptocurrencies are becoming "mainstream" around the world, so much so that some analysts believe that an "arms race" around digital currencies seems to have begun. If Trump fulfills his promise to support cryptocurrencies, the United States may accelerate the popularity of cryptocurrencies. It remains to be seen how digital assets in other countries will be affected and whether this will prompt the adoption of corresponding competitive measures.
Cryptocurrency could help Trump and his allies win the 2024 election
✪Tony Romm, economic policy reporter, The Washington Post
“This election victory highlights the cryptocurrency industry’s rapidly growing political influence.”
After the US election, the cryptocurrency industry, executives and investors were particularly happy. They believed that their political funding was not in vain, and more importantly, they would usher in four years with almost no government regulation and scrutiny - and these four years were enough for the cryptocurrency industry to undergo earth-shaking changes.
Over the years, the elites in the cryptocurrency field have been investing political funds, especially Trump. But this does not mean that the elites in the cryptocurrency field have turned to the Republican Party. In fact, as long as it is a congressional candidate who supports cryptocurrency, they will help to place campaign ads.
The effect of these efforts is obvious. Trump won the presidency, and 40 of the 58 congressmen funded by him declared victory. FairShake Cryptocurrency Group became the largest Super PAC in the 2024 election, with funds mainly coming from cryptocurrency giants such as Coinbase, Andreessen Horowitz and Ripple, raising more than 200 million, of which 130 million was used for the campaigns of 58 congressmen.
The picture shows the flow of 134 million political funds, and the names of congressmen are in the circle. As can be seen from the above picture, Moreno's expenses accounted for the largest proportion, and cryptocurrencies spent a considerable amount of money to promote Brown's defeat; at the same time, they also spent money on "smearing" opposing congressmen, who were skeptical of cryptocurrencies.
Cryptocurrency political funding has secretly changed the structure of Congress, and avatars of crypto opponents are now excluded
Despite the huge amount of funding, the action strategy of cryptocurrency funders is secretive. Take the competition between Sherrod Brown, the current Democratic Senator in Ohio, and Bernie Moreno, the Republican Senate candidate, for example. Brown, the current Senator, is the chairman of the Senate Banking Committee that regulates digital finance and has always been skeptical of cryptocurrencies. In order to unseat him, Fairshake funded his challenger Moreno with $41 million to win the election, but did not want voters to see its intentions, so its political ads focused on Moreno's contributions to immigration and employment, without any cryptocurrency promotion.
After the election, it is finally time for funders to reap the benefits. They hope that Trump will fulfill his promise to make the United States a "global cryptocurrency center." This expectation alone has pushed the price of Bitcoin to more than $76,000. They believe that Trump will keep his word. A few months ago, with Trump's help, a cryptocurrency company called World Liberty Financial obtained an operating license. After Trump takes office, he can do more.
Bitcoin price trend as of November 5 (this Wednesday)
One of those things is the Crypto-Friendly Legislation (FIT21). The bill was drafted and passed in the House earlier this year, but it encountered a lot of resistance in the Senate and has been shelved. This is why Fairshake is so focused on senators in this year's election. If this legislation is passed, the U.S. Securities and Exchange Commission (SEC) will have less regulatory power over cryptocurrencies and transfer more responsibilities to the Commodity Futures Trading Commission (CFTC) - Democratic critics remind that the CFTC will have much less regulatory power than the SEC.
That’s why, after the election, Coinbase Chief Legal Officer Paul Grewal declared: “Last night was groundbreaking for the cryptocurrency industry. All elected officials should recognize that this is an industry that’s in it for the long haul.”
Cryptocurrency’s “new political friends” – new congressmen, cryptocurrencies have invested more than $19 million in 20 campaigns, hoping to get support after they win the election (those with clear profiles are winners, and those with blurred profiles are losers)
The 2024 election is not the end, but the beginning. Fairshake immediately announced that they had raised $78 million for the 2026 midterm elections, including funding from Coinbase. Coinbase not only supports candidates, but also reaches out to voters - the organization they fund, "Stand With Crypto," is dedicated to lobbying voters to accept and support cryptocurrency transactions.
In 2022, the trading platform FTX collapsed and the Biden administration stepped up its crackdown on cryptocurrencies, sparking dissatisfaction among executives and investors in the cryptocurrency field. Since then, federal regulators have been committed to cracking down on fraud, taxing cryptocurrency investment income, and trying to classify more digital tokens as securities for increased supervision.
As a result, the U.S. Securities and Exchange Commission (SEC) is the main regulator, and its chairman Gary Gensler has filed major lawsuits against major platforms such as Coinbase, Ripple and Binance in recent years, accusing them of violating investor protection regulations. All companies have denied the allegations.
They were unwilling to sit still and hoped to reshape the regulatory landscape through political intervention, and thus found Trump - they held fundraisers for the former president in the Bay Area and met with him privately at his Mar-a-Lago estate (where he gave his final victory speech). Sponsors included PayPal co-founders David Sachs and Chamath Palihapitiya, and twin brothers Tyler and Cameron Winklevoss, founders of the trading platform Gemini. With their unremitting efforts, Trump's initial skepticism turned into a strong supporter of cryptocurrency.
At the Bitcoin 2024 conference in Nashville, Trump promised to set up a committee of industry experts and promote policies that are favorable to cryptocurrencies. He also promised to use Bitcoin as a "national strategic reserve" and to fire Gensler, chairman of the U.S. Securities and Exchange Commission (SEC). These promises have once again sparked a heated response after Trump's victory.
Cameron Winklevoss wrote passionately on social media: "Imagine how much we would achieve in the next four years if the cryptocurrency industry no longer had to spend billions of dollars fighting the SEC, but instead invested those funds in the future of currency. Amazing things are coming."
The investment in the cryptocurrency industry is huge, especially when it comes to betting on both sides. Fairshake and its two affiliates - focusing on funding Republican-focused "Defending American Jobs" and supporting Democrats' "Protecting Progress" - have become a major funder in the first election funding, covering all aspects of the campaign and aiming to become the main funder.
For example, they invested about $3.4 million in the campaign of Jim Justice, the current governor of West Virginia, and nearly $2.9 million in the campaign of Shomari Figures, a Democrat and former Justice Department official in Alabama. They also support current members of Congress who serve on key congressional committees that regulate cryptocurrencies, including Tom Emmer (R-Minn.) and Josh Gottheimer (D-N.J.) on the House Financial Services Committee.
Cryptocurrency funds provided nearly $18.4 million to run glowing ads for 23 lawmakers who hold key positions on key congressional committees that directly regulate cryptocurrency.
Take Moreno in Ohio, for example. It proves the determination of cryptocurrency tycoons to relax regulations. When they funded Moreno, Moreno was 7 percentage points lower than Brown, then chairman of the Senate Banking Committee, which regulated digital finance. In order to increase his chances of winning, the political advertising can be described as "crazy". After spending 41 million, Brown was finally driven off the stage. A Fairshake spokesperson firmly stated: "Senator Moreno's reversal victory shows that Ohio voters are looking forward to a leader who values innovation, protects American economic interests, and ensures the country's technological leadership."
Interestingly, none of the ads funded by Fairshake mentioned cryptocurrency, but many of the funded candidates publicly stated that they would promote rules that would help the cryptocurrency industry during their tenure and mentioned it in their 2025 plan. Kristin Smith, president of the Blockchain Association, a Washington lobbying group, said: "We are celebrating, but we are also planning how to develop and utilize this advantage. The biggest lesson from the past is that it is meaningless to oppose cryptocurrency. Any emerging industry does not want to get too involved in politics, but the 'unfair' experience that cryptocurrency has suffered in the past three or four years has forced us to fight back."
Cryptocurrency hot money pours into Washington, and regulation is becoming more lenient - the past and present of FIT21
Big cryptocurrency businesses are trying to change federal law through a costly lobbying campaign that has touched multiple levels of U.S. politics. Over the past four years, the companies and investors have spent at least $149 million to block tough regulations and bolster the elections of their congressional allies while attacking lawmakers they see as a threat.
The industry has spent more than $60 million on Capitol Hill to shape federal policy since 2021, according to documents analyzed by The Washington Post and data from OpenSecrets and Public Citizen, two organizations that monitor money in politics. The lobbying campaign prompted the House of Representatives to advance the Financial Innovation and Technology for the 21st Century Act (FIT21), the first major legislation on cryptocurrency passed by either chamber of Congress.
The bill transfers some federal cryptocurrency regulatory power from the U.S. Securities and Exchange Commission to the Commodity Futures Trading Commission (CFTC), which is considered less powerful, underfunded, and more industry-friendly. Analysis shows that in the past two elections, executives, investors, and even employees in the cryptocurrency field donated as much as $90 million in political donations, and this spending figure may be underestimated (because federal campaign finance laws do not require some non-profit organizations to disclose their sources of income).
They support the bill's designers and advocates, including House Financial Services Committee Chairman Patrick T. McHenry (Patrick Timothy McHenry). The day before the House bill was passed, McHenry admitted in an interview with reporters that cryptocurrency companies have become "mature" in many aspects in Washington, and this new dynamic of "knowing the times" is an important reference for congressional legislation.
Two years ago, FTX, the world's third-largest cryptocurrency trading platform, collapsed. After the collapse, many lawmakers warned that a wider collapse of cryptocurrencies could threaten the entire economy. FTX was once worth $32 billion. In March of this year, FTX's former leader Sam Bankman-Fried was sentenced to 25 years in prison by a federal court for abusing customer deposits for high-risk bets and illegal political donations, causing FTX to go bankrupt and customers to demand refunds.
The collapse of FTX has made the cryptocurrency field feel politically "threatened", and the number of political lobbying groups has rapidly increased from 58 in 2020 to more than 270 by the end of 2023. The regulatory agency they requested to transfer, the Commodity Futures Trading Commission (CFTC), not only has little power, but was originally responsible for regulating corn and grain futures. They believe that such "unprofessionalism" will be relatively friendly to the cryptocurrency field.
Political lobbying in the cryptocurrency space has doubled over time
Although FIT21 was proposed by the House of Representatives, cryptocurrency lobbyists and lawyers, most of whom are from the legal departments of cryptocurrency companies, admitted that they were deeply involved in the drafting of the bill. They simplified or even deliberately ignored many legal procedures for companies in the industry, including the appropriate relaxation of financial disclosures that had to be provided to customers earlier, and shortened the time for investors to file complaints to a very short range. These clauses protect the rights and interests of companies, but expose investors to greater risks when trading.
Amount of political funding in cryptocurrency received by officials involved in drafting and advancing House legislation
The close ties between the cryptocurrency industry and the government have alarmed consumer regulators, who are concerned about regulatory loopholes and how many opportunities these loopholes provide for financial institutions, including cryptocurrencies. Maxine Waters, the Democratic leader of the House Financial Services Committee, warned that FIT21 places the cryptocurrency field entirely under a "privileged" structure and "will allow cryptocurrency companies to completely ignore many of the compliance regulations that other companies must comply with."
Despite the controversy, lawmakers voted 279 to 136 to pass the measure, marking the latest victory for the industry. Congress also voted this month to restrict other SEC policies and the House of Representatives voted to block the Federal Reserve from issuing a digital dollar.
Many Democratic critics have compared the situation to the 2008 financial crisis, when Congress failed to stop several big banks from underwriting risky mortgages. The financial crisis and subsequent recession left about 6 million people without homes and cost the U.S. government trillions of dollars to bail out the country.
Senator Elizabeth Warren said: "Before the 2008 financial crisis, I have been saying that we did not regulate banks enough. I feel that way today. If we do not put adequate regulations in place and allow cryptocurrencies to move deeper into our economy, the end result will be bad."
Cryptocurrency companies strongly object to this comparison, arguing that members of Congress do not understand this new, fast-paced industry. To further consolidate support on Capitol Hill, they are looking to this year’s elections. As listed in the previous article, more than half of the members of Congress have received political funding from the cryptocurrency field.
It is worth mentioning that in West Virginia, State Treasurer Riley Moore won the Republican nomination for Congress and quickly gained support from the cryptocurrency industry. They put an ad for him about how Moore revitalized the manufacturing industry, created jobs, and took a "tough" stance on China, and pushed the ad to more than 10 million American people's TVs and mobile phones. In order not to deceive voters, he also added a small tofu block on his campaign website about "cultivating the emerging industry of cryptocurrency." West Virginia is one of the poorest states in the United States, and the people there don't care about cryptocurrency at all.
