In response to escalating regulatory challenges and increasing skepticism, digital asset companies are reportedly upping their political donations. Notable players, including Coinbase, Circle, and a16z, are directing funds towards supporting pro-digital-asset legislators and influencing stalled bills in Congress, particularly in anticipation of the upcoming presidential election.
Donations to Politicians
According to a recent report by the Financial Times, in the past week, these companies collectively injected $78 million into Fairshake, a federal super PAC designed to support “pro-crypto leadership.”
Faryar Shirzad, Chief Policy Officer at Coinbase, emphasized their commitment to depoliticizing digital assets through lobbying efforts, grassroots work, and initiatives like Fairshake. He stated:
“Our lobbying, our grassroots work, and now Fairshake will create room for a public debate on the merits, instead of our industry being used as a political football for demagogues who don’t understand the social benefits of the technology.”
Despite projections of Coinbase spending $4 million on lobbying this year, the industry’s collective spending has historically been modest. As per the public filings, Circle has spent only around $760,000 since 2021 on political donations.
However, the regulatory landscape is becoming increasingly influenced by critics such as Democratic Senator Elizabeth Warren. In October, Warren and approximately 100 lawmakers urged the White House and Treasury to crack down on what they called “illicit digital asset activities,” citing national security risks.
Warren expressed concerns about the unregulated nature of digital assets, stating that it attracts criminals and advertises money laundering without international restrictions. In a recent interview, Warren stated:
“The something in crypto that attracts these criminals is the fact that it’s unregulated. In fact, some of the crypto actors aggressively advertise that they do not follow international money laundering rules, holding a giant sign up that says, ‘Launder your money here’.”
It is important to note that Warren recently accused Coinbase and digital asset advocacy groups Coin Center and Blockchain Association of using the “revolving door” system to postpone regulations.
She claims that these entities are obstructing lawmakers’ efforts to form clear regulations by employing individuals with military and law enforcement backgrounds.
Fairshake Seeks More Allies
The Fairshake Super PAC actively seeks additional allies as the current political cycle in Washington draws to a close. Having expended a modest $292,000 thus far, a significant portion has been allocated to Patrick McHenry, the former chair of the House Financial Services Committee. However, he will not pursue re-election in 2024.
Notably, McHenry co-sponsored legislation focusing on the oversight of stablecoins during his tenure as committee chair.
With November’s elections looming, fundraising considerations gain prominence. Orlando Cosme, founder and managing attorney at OC Advisory, anticipates potential regulatory challenges if Democrats secure the presidential election and Congress. He interprets the heightened lobbying efforts not merely as a response to recent enforcement actions and court cases but as a strategic move to influence the upcoming election. Cosme told the Financial Times:
“So I view the increased lobbying effort as more of an attempt to impact this election and make sure that pro-crypto candidates, from both sides of the aisles, are elected rather than a response to recent enforcement actions and court cases.”
