The cryptocurrency industry celebrated a significant victory on Wednesday. Supporters of digital currencies were thrilled as Donald Trump became the President and numerous pro-crypto candidates won congressional races, including two Senate seats.
Just two years after the downfall of scams like Sam Bankman-Fried led to a “crypto winter” in Washington, the industry used a $200 million campaign fund to regain favor in D.C.
Candidates backed by crypto were close to dominating Senate races, with the election of Republican Bernie Moreno in Ohio and Democrat Elissa Slotkin in Michigan. The rise of Trump, who pledged to make America the leading “crypto capital,” resulted in a surge in bitcoin prices.
Only the undecided Arizona Senate race between Democrat Ruben Gallego and Republican Kari Lake remained, casting doubt on a complete victory for the digital currency industry. Gallego, the crypto-friendly candidate in that race, was leading in the vote count as Arizona continued to tally ballots on Wednesday.
“Those decisions are going to have consequences in terms of big crypto spending money for or against you.”
The overwhelming success sent a clear message to members of Congress and potential candidates that failing to align with the industry’s interests could lead to substantial financial repercussions, according to Rick Claypool, research director at Public Citizen.
“Now, the message that Congress receives,” Claypool said, “is very much that how you vote on crypto-related policy, those decisions are going to have consequences in terms of big crypto spending money for or against you.”
Crypto skeptics like Claypool cautioned that the impact of the spending could soon be felt, urging ordinary Americans to be cautious with their finances.
“In all likelihood, crypto deregulation is coming,” said Claypool. “People are going to have to be really careful about what they’re doing with their money. It looks like a tragedy waiting to happen.”
The election marked a new era for campaign finance, with the influence of Citizens United coming to full fruition.
Since Citizens United, business interests have often channeled their funds through “dark money” nonprofits. However, this year, the crypto industry openly disclosed its massive spending to support allies and oppose adversaries.
The industry raised over $197 million, with at least $133 million directed towards federal races, according to campaign finance data compiled by technology researcher and writer Molly White.
The funds were split between Republican and Democratic candidates during the congressional primaries, but a surge in spending on Moreno in the final weeks of the race tilted the balance in favor of the GOP.
A Crypto Mandate?
The defeat of Ohio Sen. Sherrod Brown was a blow to consumer advocates who had relied on him as a vocal leader in the Senate Banking Committee. Moreno, a car dealer with minimal statewide recognition, became a prominent figure in the industry as a vocal supporter of blockchain technology.
Brian Armstrong, the CEO of Coinbase, a leading cryptocurrency platform, expressed his delight at the industry’s victories on social media.
“Welcome to the new members of America’s most pro-crypto Congress ever… 219+ pro-crypto candidates and counting have now been elected to the House & Senate. Tonight the crypto voter has spoken decisively – across party lines and in key races across the country,” he wrote on Wednesday.
Yet, many average Americans may not have been aware that crypto was a key issue on the ballot. The Fairshake PAC, the leading industry lobbying group, spent millions on candidates like Moreno without explicitly mentioning crypto, focusing instead on topics like inflation and immigration.
“The millions they presented in ads to advance the crypto sector’s interest didn’t say a word about crypto.”
Crypto secured a significant win in the House earlier this year when bipartisan support was garnered for a crucial bill to transfer oversight from the Securities and Exchange Commission to a regulator perceived as more favorable to the industry, the understaffed Commodity Futures Trading Commission.
The industry’s success in Senate races indicates a strong momentum as the new Congress commences in January.
Even without immediate legislative action, crypto could witness a shift in regulatory stance. Trump might replace crypto critic Gary Gensler as the SEC chair, although he may not have the authority to remove him from the commission entirely.
Crypto investor Cameron Winklevoss anticipated the upcoming changes with enthusiasm.
“Imagine how much we are going to accomplish in the next 4 years,” he wrote, “now that the crypto industry won’t be hemorrhaging $ billions on legal fees fighting the SEC and instead investing this money into building the future of money. Amazing awaits.”
Editor’s Note: In September 2022, The Intercept received $500,000 from Sam Bankman-Fried’s foundation, Building a Stronger Future, as part of a $4 million grant to fund our pandemic prevention and biosafety coverage. That grant has been suspended. In keeping with our general practice, The Intercept disclosed the funding in subsequent reporting on Bankman-Fried’s political activities.
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