Crypto executives are now pouring more money into US politics than many of America’s industrial stalwarts.
Political donations from the sector surged to more than $26 million during 2021 and the first three months of this year. That influx of cash is outpacing spending by internet giants, drug makers and the defense industry -- providing a fresh pool of financing for candidates heading into November’s congressional elections.
The issue of regulating virtual tokens is not nearly as divisive as gun control or abortion rights. But the upcoming election will be highly consequential for crypto: Congress may weigh in with new laws for the asset class next year, and efforts by federal agencies to study consumer protections as well as a possible Federal Reserve-backed token are coming to a head.
“The industry has been under so much scrutiny and early next year stands to be a real inflection point in Washington,” said Eric Soufer, a political consultant with Tusk Strategies who leads the firm’s crypto and fintech practice. “It’s possible you’ll see a historic investment in this election season.”
In the 15 months through March, donations from people working in digital assets reached $26.3 million, according to the Federal Election Commission data compiled by Bloomberg. That’s an enormous leap over the less than $500,000 the industry gave through the same period in the 2020 election cycle.
Crypto’s giving compares with $20 million in contributions from tech firms such as Alphabet Inc.’s Google and Amazon.com Inc., $7 million from drug makers and $18.6 million from defense contractors, according to OpenSecrets. Data compiled by the transparency group show private equity and other investment firms gave nearly $76 million over the period.
While the roster of crypto donors is expected to mushroom as the November elections draw closer, the biggest spender thus far is Sam Bankman-Fried, the billionaire co-founder of the FTX exchange.
He contributed $16 million in April alone after being responsible for a majority of crypto’s giving through the first quarter of the year. Overall, he’s pumped in about $32 million, 75% of the industry’s total, making him the biggest individual donor other than George Soros since the start of 2021, the FEC data compiled by Bloomberg show.
The FTX CEO has used a super political action committee known as Protect Our Future for most of his spending. While several Democrats supported by that PAC have won primary contests, its biggest outlay of $11.4 million failed to boost Oregon Democrat Carrick Flynn, a political newcomer who ran on increasing readiness for a pandemic.
Flynn’s futility last month showed that all the spending won’t necessarily be enough to sway voters, particularly in crowded primaries focused on local issues. Soufer, the Tusk Strategies consultant, says crypto donors have a long way to go in terms of developing a cohesive strategy for getting the most out of their contributions.