How cryptocurrency is poised to influence elections

Ryan Selkis, a cryptocurrency executive, was dining at Mar-a-Lago last month when he received an unexpected invitation: Former President Donald Trump wanted him to come on stage and say a few words.

Selkis, who runs crypto data company Messari, was among a few hundred attendees at an event celebrating Trump’s series of non-fungible tokens, the digital collectibles known as NFTs. When he reached the lectern, Selkis turned to the former president.

“There are 50 million crypto holders in the United States,” the executive said. “That’s a lot of voters.”

This message has become a political talking point in the crypto world, as the industry attempts to shake off a wave of scandals and establish itself as a powerful force in the 2024 election cycle. Three big companies crypto companies banded together to fund a group of affiliated super political action committees, investing about $150 million to elect pro-crypto candidates in congressional races.

The PACs do not plan to participate in the presidential election, a spokesperson for the groups said. But top crypto executives have tried to rally the industry behind Trump, who has reciprocated by praising digital currencies and hosting executives at Mar-a-Lago.

Many crypto proponents view the 2024 election as a pivotal moment. After the collapse of a series of crypto companies two years ago, the Biden administration embarked on an aggressive crackdown, filing lawsuits and criminal charges against some of the industry’s top figures. The Securities and Exchange Commission is pursuing cases that could effectively force the crypto industry out of the United States.

“The 2024 election will be the most important in crypto history,” said Brad Garlinghouse, CEO of Ripple, a crypto company that has been battling the federal government for years. “You see a technology becoming a partisan political issue. »

Garlinghouse, Selkis and other leaders argued that newly energized “crypto voters” could influence the outcome of the election. They often cite a survey commissioned by cryptocurrency exchange Coinbase, which suggests 52 million Americans own digital currencies. (The Federal Reserve estimates that this total represents 7% of the adult population, or about 18 million people.)

But voters’ supposed passion for crypto may be less important than the industry’s war chest. Ripple, Coinbase and venture capital firm Andreessen Horowitz have each donated around $50 million to crypto PACs, which plan to spend the funds in several competitive Senate races. In March, the largest PAC, Fairshake, spent about $10 million on attack ads against Rep. Katie Porter, a Democratic candidate in the California Senate primary who was allied with Sen. Elizabeth Warren, a critic of longstanding in cryptography. Porter lost his race.

“A single, relatively small industry is literally trying to buy off enough politicians to hijack the public agenda,” said Dennis Kelleher, president of Better Markets, a financial reform advocacy group. “It’s pretty mind-blowing.”

Learn more about the 2024 presidential election

The vast resources available to the industry have made a specific set of issues a topic of discussion during the presidential campaign. Independent presidential candidate Robert F. Kennedy Jr. made his first official campaign appearance at a Bitcoin event in Miami, and he has attended several industry conferences, sometimes hosting fundraising meetings with rich leaders on the sidelines.

President Joe Biden has long been seen as anti-crypto because his Securities and Exchange Commission chairman Gary Gensler has sued many crypto companies. But some Biden supporters, including investor Mark Cuban, insisted his campaign would mend fences.

The campaign was receptive to the message, Cuban said in an email. In recent weeks, Biden officials have contacted Coinbase and Ripple, asking to discuss crypto policy, four people familiar with those discussions said. Yet much of the industry appears to be rallying around Trump. While the former president once said bitcoin “looks like a scam” and has frequently criticized the tech industry, he has made several pro-crypto comments over the past month, promising to end the crackdown regulatory. On Tuesday, Trump met at Mar-a-Lago with executives from some of the world’s largest bitcoin mining companies, including Marathon Digital and Riot Platforms.

Bitcoin should be “MADE IN THE USA!!!” » he posted on his social network.

The last time the crypto industry spent significant sums in a political race, its biggest donor was Sam Bankman-Fried, founder of FTX, who spent tens of millions of dollars supporting both Democrats and Republicans in the 2022 midterms. Two years later, Bankman-Fried’s company is bankrupt and he is serving a 25-year prison sentence for fraud.

The collapse of FTX was a huge setback for the crypto industry’s efforts in Washington. Last year, the SEC sued Coinbase and other crypto companies, arguing that the digital assets they allowed customers to buy and sell were unregistered securities. In May, the industry scored a rare legislative victory when Congress voted to overturn an SEC accounting directive challenged by crypto companies. Biden vetoed the resolution.

Now the industry is fighting back. Fairshake has announced plans to enter four more Senate races this year, including close contests in Ohio and Montana, where Democrats who have criticized crypto are up for re-election. Privately, crypto executives have credited Fairshake with softening up some skeptical lawmakers, including Sen. Sherrod Brown, D-Ohio, according to two people familiar with the conversations. Brown, who chairs the Senate Banking Committee, said in April that he was willing to advance an industry-backed bill.

A few weeks after the California Senate primary in March, Representative Adam Schiff, the Democrat who defeated Porter, visited Coinbase’s offices in Mountain View, California. He met with representatives from Coinbase, Andreessen Horowitz and crypto-focused investment firms Electric Capital, Paradigm Capital and Haun Ventures, two people familiar with the meeting said.

Trump hasn’t always been a supporter of crypto. He has said he prefers dollars to bitcoin, and in 2019 he tweeted that digital currencies were “air-based.” But lately, some crypto executives – looking for a political savior – have embraced it.

Crypto enthusiast and former presidential candidate Vivek Ramaswamy has claimed credit for Trump’s crypto pivot and established himself as his emissary to the industry: On Wednesday afternoon, Ramaswamy met privately with Brian Coinbase CEO Armstrong at the Capitol Hill Club. in Washington and encouraged him to support the Trump campaign, a person familiar with the meeting said.

Armstrong has not publicly endorsed a presidential candidate. “We will not give special treatment to any particular party,” he said in a statement. “Crypto is a truly bipartisan issue.”

Selkis, who identifies as a libertarian, attended the Mar-a-Lago event in May after getting a ticket from a colleague who couldn’t attend. “I’m eating my salad and the president cold calls me on stage,” Selkis recalled in an interview.

That night, Trump said, “If you’re in favor of crypto, you better vote for Trump.” » He also announced that his campaign would accept digital currency donations and pledged to commute the life sentence of Ross Ulbricht, a cult hero in the crypto world who ran the online drug marketplace Silk Road.

On Tuesday evening, Trump met with about 15 executives from Bitcoin mining companies for more than an hour at Mar-a-Lago, according to one of the participants, Salman Khan, chief financial officer of Marathon Digital.

At one point, Khan said, executives showed Trump the inside of a machine used for bitcoin mining, an energy-intensive process that has raised environmental concerns. “He loved the made-in-America functionality,” Khan said.

Not everyone in the crypto world agrees with Trump. At a conference in May, Marvin Ammori, a Democrat who works for the crypto company Uniswap, debated on stage with Selkis about the industry’s political strategy, warning that Trump might not keep his campaign promises.

Yet this month, Trump attended a fundraiser at the home of David Sacks, a prominent venture capitalist in San Francisco, and reiterated his support for crypto, according to three people in attendance. Guests included Selkis, crypto executives Tyler and Cameron Winklevoss and Paul Grewal, Coinbase’s chief legal officer, the sources said.

“The crypto vote has already been won by President Trump,” Selkis said. “It’s finish.”

This story was originally published on nytimes.com. Read it here.

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