The Rise of Crypto in Political Fundraising
This week witnessed a major milestone as Coinbase, Circle, and a16z collectively contributed a staggering $78 million to Fairshake, a federal super PAC dedicated to promoting “pro-crypto leadership.” This PAC has the unique ability to accept unlimited funding from both corporations and individuals for election spending. The move underscores the industry’s commitment to removing the politicization of cryptocurrencies and advocating for their broader benefits beyond mere political rhetoric.
Faryar Shirzad, the Chief Policy Officer at Coinbase, emphasizes the importance of approaching crypto from a non-partisan standpoint, aiming to ignite a public debate based on the merits of the technology. The establishment of Fairshake marks a significant political advancement for an industry that has, until now, been relatively modest in its political expenditures. Although Coinbase’s lobbying spend for this year is projected to be $4 million, the heightened political climate in Washington, especially surrounding crypto, demands a more robust approach.
Navigating the Challenges in the Political Landscape
The increasing scrutiny and criticism from crypto skeptics, notably Democratic Senator Elizabeth Warren, have been influential factors in this strategic shift. Recent developments, such as Senator Warren and other lawmakers writing to the White House and Treasury, urging stringent regulations on crypto activities due to national security risks, have further intensified the political pressure faced by the industry.
The political environment is becoming increasingly hostile towards cryptocurrencies, particularly in the wake of controversies involving figures like Sam Bankman-Fried, the former CEO of FTX, and the admissions made by Binance regarding shortcomings in anti-money laundering measures. The fines and penalties imposed on companies like Binance this year highlight the importance of specialized regulations tailored to the crypto industry that address existing securities and money laundering laws.
In December, Senator Warren proposed a bill that aligns crypto industry standards with traditional anti-money laundering obligations. One of the bill’s co-sponsors, Senator Roger Marshall, argues that law-abiding crypto entities should not fear these regulations since they aim to hold crypto to the same standards as banks.
In response to these developments, the crypto industry is actively seeking new allies as another political cycle in Washington concludes. While Fairshake’s spending so far has been modest, attention is now turning to the upcoming elections. Orlando Cosme, founder and managing attorney at OC Advisory, views the increased lobbying efforts as a strategy to influence the election and ensure the victory of pro-crypto candidates.
As the political landscape evolves, the industry’s heightened involvement in the political arena underscores its growing significance and the recognition of the need for a collaborative approach to regulation and policymaking.