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How Democrats Missed the Crypto Opportunity in 2024

Written by Stephanie Bedard-Chateauneuf on November 8, 2024. Posted in Cryptocurrency. Leave a Comment

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In the aftermath of the 2024 election, the cryptocurrency industry has solidified itself as a key player in the U.S. political arena. With the GOP now controlling the presidency and the Senate, crypto PACs (Political Action Committees) have successfully backed candidates who support crypto regulation reform. The election results reveal a notable gap in the Democrats‘ approach to crypto regulation, highlighting missed opportunities that could have given the party an edge in managing the rapidly expanding blockchain and digital asset sectors.

Crypto’s Call for Regulatory Clarity

For years, leaders in the crypto industry have been pushing for clear, fair regulations. While industry insiders held bipartisan discussions and encouraged transparency, many Democratic leaders dismissed digital assets as risky, associating them with scams or criminal activity. This resistance hindered efforts to create a balanced crypto regulatory framework that would foster innovation and protect consumers.

Crypto advocates hoped that Democrats would consider the broader economic benefits of blockchain, but instead, the Democrats’ stance left a vacuum in policy. This gap allowed conservative-backed candidates, especially those aligned with the pro-crypto movement, to emerge as champions of crypto innovation, promising a friendlier regulatory environment.

Crypto’s Shift to the GOP

As Democrats held back, crypto leaders found support in MAGA-aligned GOP candidates, who endorsed a more hands-off approach to financial regulation. With a GOP-controlled Congress, the industry is now positioned to push for reforms like FIT21, a proposed policy that could move crypto oversight from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC). This shift would reduce SEC’s stringent controls over digital assets, a move that many crypto companies believe will help the industry flourish.

However, while a GOP-led administration may favor deregulation, it also comes with potential downsides. The GOP’s Project 2025, a conservative blueprint that promotes executive power consolidation, could have unintended impacts on individual rights. With Trump and his supporters pushing a robust deregulatory agenda, financial freedom might expand for crypto, but at the possible expense of other freedoms.

The Impact on Marginalized Communities

One of the most significant concerns about the Democrats’ missed opportunity in crypto regulation is its impact on marginalized communities, particularly Black Americans. For many Black investors, crypto has been a gateway to financial independence, allowing them to bypass traditional financial barriers. Studies reveal that around 23% of Black Americans own cryptocurrency, a higher percentage than other demographic groups.

Crypto offers an accessible entry point for these communities to begin investing and building wealth. However, the GOP’s approach to financial regulation and its stance on social policies could undermine the progress these communities have made. Project 2025, for instance, promotes restrictive social policies that may clash with the values of diverse crypto users who view digital assets as tools for empowerment.

Crypto PACs and Their Rising Influence

The 2024 election cycle saw crypto PACs like Fairshake, Defend American Jobs, and Protect Progress investing millions to support pro-crypto candidates. These PACs, backed by major crypto players like Coinbase (NASDAQ:COIN) and Ripple Labs, channeled funds to candidates who promised to create a favorable regulatory landscape for digital assets. Fairshake alone became the largest single-issue PAC in history, spending over $40 million on candidates like Bernie Moreno, who unseated Democratic incumbent Sherrod Brown in Ohio.

Such investments underscore the crypto industry’s dedication to influencing policy. However, some observers worry that massive spending on political campaigns could drown out the voices of communities that depend on crypto for financial freedom, shifting power to large corporations and diluting crypto’s promise as a democratizing force.

A Missed Opportunity for the Democrats

The Democrats’ reluctance to engage meaningfully with the crypto industry has not only cost them a foothold in financial innovation but also a chance to foster inclusion. Surveys by organizations like Paradigm show that Black Americans are more likely to view crypto as a tool to bridge the racial wealth gap. Democrats could have leveraged this sentiment, aligning with crypto advocates to support policies that balance innovation with protection.

By dismissing crypto, the Democrats have given up an opportunity to shape a regulatory framework that aligns with their values of fairness and inclusion. Now, under a GOP-led administration, crypto may see a friendlier regulatory climate, but it remains to be seen how much of this will benefit the communities who initially found financial hope in digital assets.

What Lies Ahead for Crypto and the Democrats

With Trump back in office and a crypto-supportive Congress, Democrats must reassess their stance if they want to regain influence over this sector. Crypto PACs have demonstrated their power, showing that financial empowerment can be a persuasive political tool. To stay relevant, Democrats may need to approach crypto with an open mind, engaging with industry leaders to create policies that foster innovation without sacrificing consumer protection.

Crypto’s journey in the U.S. political landscape is far from over. As Project 2025 gains momentum, the very communities that turned to crypto for financial freedom may face new challenges under the GOP’s conservative agenda. The question now is whether the crypto industry will rise to fulfill its promise of financial inclusion or prioritize corporate gains.

For Democrats, the lesson is clear: innovation cannot be ignored. By sidelining crypto, the party has missed a crucial moment in economic transformation—one with the potential to empower millions.

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The cryptocurrency industry made a powerful statement in the 2024 election, spending an estimated $135 million to support more than 50 candidates across the U.S. In a remarkable outcome, 48 out of 48 candidates backed by crypto’s largest political action committees (PACs) emerged victorious, signaling a significant milestone for crypto political influence. With key wins in both the House and Senate, the industry has positioned itself as a serious player on Capitol Hill, aiming to shape the legislative landscape for blockchain and digital assets.

Record-Breaking Spending for a Political Shift

Crypto’s biggest PAC, Fairshake, alongside affiliated PACs like Defend American Jobs and Protect Progress, has raised and deployed funds from industry giants such as Coinbase (NASDAQ:COIN), Ripple Labs, and venture capital firm Andreessen Horowitz. Their combined spending has outpaced traditional donors, trailing only the fossil fuel industry in total political contributions. Fairshake’s influence, which swayed races nationwide, marks a new approach for crypto PACs, where the focus was on electing industry-friendly candidates without overtly promoting crypto.

One of the most significant victories was in Ohio, where Fairshake spent over $40 million to support Bernie Moreno, a Republican who unseated long-time Democratic senator Sherrod Brown. Notably, campaign messaging rarely mentioned crypto, instead focusing on economic policies, Social Security, and energy independence, showing how the industry is shifting its strategy to appeal to broader voter bases while securing allies.

A New Era of Crypto Political Influence and Legislative Impact

Following the election, a coalition of crypto lobbyists celebrated “the most pro-blockchain and pro-crypto Congress in history,” calling on President-elect Donald Trump to remove SEC Chair Gary Gensler. The SEC’s strict approach to crypto regulation has long been a point of contention within the industry, with Coinbase CEO Brian Armstrong and other leaders hoping to soften regulatory stances.

With election victories in place, crypto PACs aim to solidify these gains in the next legislative cycle. Coinbase and Ripple are expanding their lobbying efforts, adding more representatives to advocate for favorable policies. Meanwhile, Andreessen Horowitz is establishing a Washington office to deepen the sector’s engagement with policymakers. Such efforts underscore the industry’s commitment to long-term political influence beyond just campaign contributions.

Crypto vs. Established Donors: Outspending Competitors

Crypto PACs’ recent spending efforts highlight a growing shift in corporate political influence. Fairshake and its affiliates have outspent traditional corporate donors like Koch Industries and Chevron Corp., focusing on incumbents and challengers who support innovation and deregulation in the blockchain space. Their strategy also serves as an “intimidation tool,” according to Public Citizen’s Rick Claypool, pressuring politicians to adopt pro-crypto stances without alienating the broader voter base.

In Michigan, Protect Progress spent $10 million supporting Elissa Slotkin and Ruben Gallego, both of whom previously voted for pro-crypto legislation. With such heavy investment in these candidates, the industry aims to build a reliable base of crypto-friendly legislators in Congress, ensuring favorable votes on critical issues.

Challenges and the Road Ahead

Despite these gains, crypto’s political journey faces obstacles. Proposed trade tariffs and regulatory shifts under President-elect Trump could pose challenges, particularly with tariffs on goods from China, where some crypto manufacturing supply chains are based. Higher tariffs could increase costs for companies like Nvidia (NASDAQ:NVDA) and other tech firms working in blockchain, raising broader questions about the cost-effectiveness of supporting crypto growth.

Moreover, spending alone doesn’t guarantee favorable legislation. As Peter Loge from George Washington University noted, campaign contributions secure meetings but don’t ensure policy changes. Crypto PACs will need to consistently support candidates over multiple election cycles to see meaningful regulatory shifts.

Long-Term Plans and a Template for Future Influence

Fairshake and its affiliates are already gearing up for the next election cycle, with Coinbase committing an additional $25 million and Andreessen Horowitz adding $23 million to campaign funds for the 2026 midterms. This sustained investment reflects a strategic approach that other industries may emulate, focusing on building long-term relationships with candidates and ensuring repeated support.

As crypto continues to gain momentum, the industry’s deep pockets and strategic alignment with key issues like economic growth and innovation position it as a potent force. While crypto PACs have largely avoided discussing blockchain directly with the public, their success shows that targeted spending can drive political influence in ways that align with core business objectives.

The 2024 election marks a turning point for crypto’s role in U.S. politics. By flexing its financial muscle and strategically supporting candidates, the cryptocurrency industry is ensuring its voice will be heard in Congress, setting the stage for favorable legislation and regulatory shifts that could redefine the future of blockchain in America.

Featured Image: depositphotos @ EdZbarzhyvetsky

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