From donations to decisions: how crypto PACs target Senate races

Crypto-focused PACs, backed by the industry’s giants, are making waves in Senate campaigns to elect crypto-friendly leaders.

Crypto-focused political action committees (PACs) like Fairshake are rising, with significant financial contributions to Senate races.

Backed by prominent figures in the cryptocurrency industry, these groups aim to support political candidates who share their vision for the future of cryptocurrency and blockchain technology.

The impact of PACs was seen in the substantial $10 million campaign against Katie Porter, a critic of cryptocurrency and a Democratic Senate candidate in California, who recently lost her election.

Porter has been known for her critical stance on concerns about the environmental impact of crypto mining.

Fairshake’s war chest, significantly filled by donations from industry giants like Coinbase, Ripple Labs, and Andreessen Horowitz, has amassed over $85 million.

Why this intense involvement? The crypto industry is at a crucial moment. It’s seeking legitimacy, grappling with public skepticism, and, most crucially, aiming to overcome the regulatory challenges. 

Let’s investigate the goals of these well-funded political action committees and their influence on Senate races.

Understanding crypto’s political influence

The strategy of these PACs is more than just financial support. They’re actively engaging in states where the competition is tough, leveraging their successes, such as the substantial investment to defeat Rep. Katie Porter in California, to move towards more critical Senate contests.

Led by Fairshake, these PACs are mobilizing substantial financial resources, including a notable $4.9 million funding from the Winklevoss twins, to support candidates sympathetic to the crypto industry while challenging those against it.

According to polls, the “crypto voters” segment is growing, making up 44% of voters across the U.S. People who either own or consider owning digital assets could sway election outcomes.

Cryptocurrency is becoming a significant topic in political campaigns, as some candidates support and promote blockchain technology as a key part of their agenda.

Politicians like Ted Budd, Blake Masters, Tim Ryan, and JD Vance have made crypto-friendly legislation a cornerstone of their past campaigns, meaning digital assets could become a crucial issue in future elections.

What is Fairshake up to?

Fairshake focuses on four critical Senate races: the general elections in Ohio and Montana, and the Democratic primaries in Maryland and Michigan. 

This choice is based on the vulnerability of incumbent Democratic senators in Ohio and Montana. These senators are known for their skeptical views on crypto, and Donald Trump won the state election in 2020.

Senator Sherrod Brown of Ohio had previously suggested a nationwide crypto ban, and Senator Jon Tester of Montana had questioned the very existence of crypto.

However, Fairshake’s approach is more complex. Rather than direct opposition, the PAC keeps its options open, suggesting that if these senators adjust their positions to be more crypto-friendly, they might still win Fairshake’s support.

In the Democratic primaries of Maryland and Michigan, the PAC is stepping into less charted territories. The candidates in these races, such as Congresswoman Elissa Slotkin in Michigan and David Trone in Maryland, have not prominently featured crypto in their campaign narratives. 

Slotkin has limited her public comments on crypto to transparency in politicians’ crypto trades, while in Maryland, neither major candidate has taken a definitive public stance on crypto.

The backdrop to this strategic push is the dramatic rise and fall of Sam Bankman-Fried and his crypto exchange FTX, which previously funneled millions into congressional races.

Fairshake and its affiliated PACs, Protect Progress and Defend American Jobs, represent a new phase in this engagement, aiming to support candidates likely to foster a regulatory environment conducive to crypto’s growth.

The SEC’s stranglehold 

The aggressive stance of PACs supporting crypto in the upcoming elections can be largely attributed to the regulatory environment shaped by the SEC under current and previous administrations.

The SEC, under Chairman Gary Gensler, has notably increased its scrutiny and regulatory actions against crypto, labeling the market as “rife with fraud, scams, and abuse” and likening the current state of crypto to the “Wild West” without adequate investor protection. 

This perspective has led to significant enforcement actions, including against major players like Binance and Coinbase, accusing them of operating unregistered exchanges and selling unregistered securities, actions viewed by many, including Coinbase’s CEO Brian Armstrong, as stifling innovation and giving traditional financial institutions an unfair advantage​​​​.

SEC’s regulatory approach has also created a chilling effect on the decentralized finance (defi) projects and the broader crypto ecosystem, as developers and entrepreneurs face uncertainty about pursuing innovations in the face of potential SEC enforcement actions​​. 

Moreover, the classification of popular cryptocurrencies like Solana (SOL), Cardano (ADA), and Ripple (XRP) as securities subjects them to stringent regulations, potentially hampering their growth and limiting their applications in DeFi projects​​.

In response to these and other similar regulatory challenges, PACs like Fairshake have become more aggressive, seeking to support candidates who favor a more innovation-friendly regulatory framework for cryptocurrencies. 

Their actions suggest a blend of financial muscle, policy advocacy, and direct involvement in political campaigns, aiming to influence the immediate electoral cycle and shape the broader lines of crypto regulation and acceptance in the U.S. political mainstream.