Crypto

Explanation: The Crypto Industry Is Spending Millions on the US Midterm Elections

Nov. 8 (Reuters) – The crypto industry has spent millions on the US midterm elections in a year of great loss and upheaval as the industry looks to win ground among lawmakers as Congress debates tightening regulation of digital assets.

Cryptocurrency evangelists see 2023 as a critical year for regulation as Congress is expected to make progress on legislation on digital products and stablecoins, a type of cryptocurrency pegged to the US dollar. Cryptocurrency firms are looking to support industry-friendly political candidates.

The elections come at a turbulent time for the crypto industry. The price of bitcoin has fallen by about 70% from its peak, investors are more concerned about the risk of crypto assets, and on Tuesday, crypto giant Binance tentatively agreed to buy a non-US division from FTX to help the rival exchange cover a “cash shortfall”. .

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WHO IN CRYPTO SPENDS MONEY FOR THE MIDDLE ELECTIONS?

FTX CEO Sam Bankman-Fried has vastly outperformed everyone else in the crypto industry. His nearly $40 million in campaign contributions this election cycle makes him the sixth largest individual donor in the United States, according to OpenSecrets’ largest list of individual donors.

According to OpenSecrets, the vast majority of his spending has been for Democrats.

The Binance deal, which Bankman-Fried announced on Tuesday, marked a dramatic change in the fortunes of the crypto entrepreneur.

Ryan Salame, FTX affiliate CEO, was the 14th-highest individual donor on the list, giving more than $23.6 million to Republicans, including $11,600 to support the campaign of Rep. Alex Mooney, a West Virginia Republican.

FTX did not respond to a Reuters request to confirm these figures.

Skybridge Capital, a digital asset investment management company founded by former Trump White House communications director Anthony Scaramucci, contributed $100,000 to Crypto Innovation’s super-PAC this year, as did Scaramucci himself.

“People have said they believe in blockchain technology, want more financial inclusion, and demand that politicians listen. That’s why at SkyBridge we’ve made such a big bet on cryptocurrencies – and just as importantly, on the underlying blockchain technology,” a Skybridge spokesperson said.

WHICH CANDIDATES GET MONEY FROM CRYPTO?

Legislators who have expressed an interest in codifying cryptocurrency legislation, as well as leaders of influential committees, have received money from cryptocurrency-related PACs.

The two largest public crypto companies in the US, Coinbase (COIN.O) and Robinhood (HOOD.O), also have PACs that have spent more than $11,000 and $44,000, respectively, through the middle of the election. confirmed. by companies.

Coinbase, Robinhood and industry trading group Chamber of Digital Commerce donated their PACs to Representative Patrick McHenry, according to FEC reports. As the top Republican serving on the House Financial Services Committee, McHenry is likely to become its chairman if the Republicans take control of the House of Representatives. The Chamber of Digital Commerce did not respond to a request to confirm its contribution.

Super PAC Crypto Innovation spent at least $167,000 to support McHenry’s re-election campaign, paying for advertising and direct mail campaigns. The Group did not respond to a request for confirmation of its contribution.

According to FEC reports, Coinbase, the Chamber of Digital Commerce and cryptocurrency-focused HODLpac made a donation to Senator Ron Wyden, Democratic Senate Finance Committee chairman. Crypto Innovation PAC has spent more than $356,000 in independent spending to support Senator John Boozman, the top Republican on the Senate Agriculture Committee.

WHAT IS THE CRYPTO INDUSTRY LOOKING FOR IN THE BACK?

Cryptocurrency firms may hope to influence laws as politicians push digital asset legislation in the coming months.

McHenry and Rep. Maxine Waters, a Democrat who now chairs the House Financial Services Committee, are negotiating a bipartisan stablecoin bill. Although the details are yet to be finalized, most analysts believe that stablecoins are the easiest crypto issue for lawmakers.

Cryptocurrency companies like Circle want legislators to create a foundation for stablecoins to help develop the industry and systematize consumer protection. Currently, there is no federal regulator that controls stablecoins.

Boozman and Stabenow, along with Senators Cory Booker and John Thune, introduced the Digital Consumer Protection Act of 2022, a bipartisan bill that would give the CFTC more power to regulate cryptocurrencies.

Some crypto experts, such as Ryan Selkis, founder and CEO of cryptocurrency market research firm Messari, have raised concerns that the bill would pose an existential threat to decentralized finance (DeFi) by forcing decentralized crypto exchanges to register with the Commodity Futures Trading Commission. (CFTC). ). ).

Proponents of DeFi in particular, and crypto firms in general, are likely hoping that their contributions to the campaign will help them get their message across to election winners.

Reporting by Hannah Lang in Washington; Edited by Lanan Nguyen, Megan Davis and David Gregorio

Our Standards: Thomson Reuters Trust Principles.

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