Crypto is an important theme in the 2024 presidential race, influencing political funding and voter priorities.
The influence and importance of crypto in U.S. elections have gained momentum in recent years, marking a new era in political funding and voter priorities.
For the 2024 presidential elections, crypto is not just a fringe issue but one of the central themes in the political discourse. This trend is reflected in both the Democratic and Republican parties, where candidates have been actively advocating for crypto-related regulations and policies. President Biden signed an executive order to create a regulatory framework for digital assets, illustrating the bipartisan interest in the crypto market.
Public interest in the crypto sector has surged, too, influenced by economic factors like inflation. A survey by Grayscale found that 73% of voters believe that presidential candidates should possess a well-informed viewpoint on new technologies like AI and crypto.
46% of voters are waiting for additional crypto policies before investing, highlighting a desire for regulatory clarity.
This survey also shows that half of the young voters who own crypto are considering candidates’ positions on digital assets, suggesting that it will influence voting decisions.
Moreover, Millennials, in particular, believe crypto will be part of their future portfolio.
The murky waters of crypto in political campaigns
The role of crypto in the 2024 presidential election is shaping up to be significant, influencing not only voters’ interest but also campaign donations.
Key players in the crypto market, such as Coinbase, Circle, and Andreessen Horowitz, have collectively contributed close to $80 million to Fairshake, a federal super PAC advocating for pro-crypto leadership.
According to the Financial Times, Coinbase alone is set to spend around $4 million on lobbying in 2023, while Circle has invested $760,000 since 2021.
These major crypto entities’ involvement in political funding is about showcasing their financial power and adapting to a changing regulatory environment.
The challenges faced by crypto companies like Binance and FTX have led to a more cautious approach by regulators towards the crypto industry.
In response, these crypto companies are opening their wallets to back candidates who are more likely to support crypto-friendly regulations.
However, not all responses to the increasing influence of crypto in politics are positive. There are concerns about the potential for misuse, such as money laundering, and calls for crypto regulatory updates akin to traditional banking.
These concerns are echoed by legislators like Senator Elizabeth Warren, who sees cryptocurrencies as potential threats to national security and hubs for criminal activity.
Crypto’s inherent features, such as relative anonymity and ease of transfer, make it a potentially attractive option for discreet and possibly unethical political donations.
One of the examples is the case of Sam Bankman-Fried, the founder of FTX, who became one of the largest donors in the 2022 U.S. elections.
Bankman-Fried contributed more than $37 million to political campaigns, leading to speculation about the transparency and origins of these funds.
The controversy intensified, given the subsequent legal troubles and bankruptcy of FTX, casting a shadow over the legitimacy of these contributions.
How different states treat crypto donations
The legal landscape for crypto contributions varies significantly across states, adding another layer of complexity to the issue.
States like California, Colorado, Iowa, Ohio, Tennessee, and Washington permit crypto contributions, but their approaches vary.
For example, Washington state treats crypto donations as equivalent to cash contributions with a $100 cap, while Arizona treats them more like traditional contributions. This variation in state laws creates complexities in the legal navigation of crypto contributions.
The Federal Election Commission (FEC) has provided guidance for reporting such donations, but most states remain in a gray area, with only a few, like Michigan, North Carolina, and Oregon, explicitly banning them.
Recent developments have added a new dimension to the influence of crypto in U.S. politics. As per a CNBC report, the Cedar Innovation Foundation, a nonprofit heavily backed by the crypto industry, has been actively launching advertisements against prominent lawmakers and has recruited a team of strategists to bolster its influence.
Notably, the Cedar Innovation Foundation has been implicated in significant lobbying efforts, spending over $27,000 on ads targeting industry critics like Senators Elizabeth Warren and Roger Marshall.
The secretive nature of this organization, which does not disclose its donors, adds to the concerns about transparency and potential misuse in the realm of crypto political contributions.
Making things more difficult, the tracking and tracing of these contributions are fraught with challenges.
For instance, platforms like BitPay facilitate crypto contributions but do not entirely demystify the transaction process.
The investigation by the Center for Public Integrity from 2018 revealed a diverse group of 20 political candidates running for various offices who sought or received funding through cryptocurrency.
Among these, at least three candidates were from a state that subsequently prohibited such donations.
Presidential candidates’ stance on crypto
As the 2024 U.S. Presidential election approaches, the candidates’ stances on cryptocurrency are becoming increasingly important.
This is particularly true as Bitcoin and other digital assets become more integrated with the traditional financial system. A clear indicator of this trend is the SEC’s approval of 11 spot Bitcoin ETFs.
Among the notable figures, Ron DeSantis, a Republican, has shown a strong anti-central bank digital currency (CBDC) stance.
He has proposed allowing businesses in Florida to pay state fees with cryptocurrencies and has passed laws in the state to prohibit the use of a federal CBDC as money.
DeSantis has also expressed intentions to ban CBDCs at a national level if elected president, viewing them as tools that consolidate power from individuals to central authorities.
On the Democratic side, Robert F. Kennedy Jr. has emerged as a pro-crypto advocate. He has acknowledged cryptocurrencies, particularly Bitcoin, as a major innovation engine.
Kennedy has been vocal about his belief that the U.S. government should not hinder the crypto industry and has opposed Biden’s proposed tax on cryptocurrency mining.
The road ahead
The role of crypto in the 2024 elections boils down to a few key points.
Firstly, there may be an anticipation for candidates to provide more clarity on their crypto policy. This is not just a matter of avoiding vagueness; it acknowledges the growing attention from voters, particularly the younger demographic.
Secondly, the scrutiny will extend to how election campaigns navigate the complexities of crypto donations, given the varying regulations across states. It’s expected to be a legal labyrinth of sorts.
After recent controversies, there may be a lot of scrutiny about where the money comes from and how it’s used.
Lastly, against the backdrop of a prominent economic discourse, candidates’ perspectives on crypto as either part of the solution or problem will be closely observed.
In short, this year’s presidential election could test how politics adapts to new financial realities.
