A number of US politicians are considering whether a stance on digital assets could win votes, as the crypto lobby’s footprint grows in Washington.
With the US midterms around the corner, “cryptocurrency voters” are rapidly becoming a desirable bloc – and could be on their way to becoming a political force in future elections.
Alongside that is the progress an upstart “crypto lobby” has made on Capitol Hill, spawning a plethora of trade associations, political action committees and think tanks that emerged in a short period of time, showcasing crypto as a growing player in Washington.
“The crypto industry has realised that it cannot sit idle while politicians attempt to regulate digital assets. And politicians have woken up to the fact that they can tap the potential of a new voter,” a Washington DC-based political consultant wishing anonymity told TRT World. The consultant also advises a portfolio of crypto firms.
While unlikely to be at the top of most Americans’ kitchen table issues, according to a recent poll, a considerable number of registered voters seem to care about crypto policy issues.
The survey, conducted by Global Strategy Group and Fabrizio, Lee & Associates, found that 44 percent of voters across the US could be described as “crypto voters” – those who own or are considering owning digital assets.
A subset of 17 percent of those voters already own crypto, which is “an extremely competitive group of voters that both Democrats and Republicans have been pitching in recent elections,” the poll conductors said in a statement.
The survey was commissioned by GMI PAC, a crypto-focused group backed by former Trump administration official Anthony Scaramucci, which has raised over $10 million since being formed this January, including $2 million from billionaire Sam Bankman-Fried, founder of the crypto exchange FTX.
Perianne Boring, founder and CEO of the Chamber of Digital Commerce, a trade association representing blockchain companies, believes crypto and digital asset policy issues are becoming more popular with mainstream voters because “they align closely with their common values”.
“Any successful technology or network requires adoption and use by society, by the people. It is the demand of people that drives innovation. We definitely see that with blockchain and cryptocurrencies – the people are the network,” Boring told TRT World.
What makes the poll’s findings significant is that there are more voters who hold crypto than a union membership card in some of the most critical swing states. And if Democrats and Republican operatives figure out how to tap this new voting bloc and speak to them the right way, they could be up for grabs.
When it comes to party preference, the crypto voter trusts Democrats (46 percent) more than Republicans (36 percent). This could be because those who hold digital assets are generally under 40, a demographic that typically skews Democrat. Despite that, favourable views of crypto are not shaped around partisanship.
“Both parties are in a battle to connect with younger Black and Hispanic men – groups that have shown over the past few cycles to be less calcified in their party preference. These groups also own crypto at much higher rates,” Bobby Kaple, senior advisor to GMI PAC, said. “Connecting with them on crypto issues could unlock just enough support to win some of these tight races.”
With Bitcoin and other cryptocurrencies surging in popularity since the start of the pandemic, millions of people around the world now own digital assets – a market that peaked at $3 trillion before floundering this year, with around 85 million individual wallets presently active.
While merely holding a digital asset doesn’t necessarily make a voter a part of a certain class, it is more about what that asset represents in terms of sentiment.
“Blockchain and digital asset innovations support transparency and privacy, and give wallet owners greater control over their investments. Those values of transparency, privacy and control, are increasingly important to American voters,” said Boring.
Given the lack of regulatory guidance, a number of candidates have started to run on pro-blockchain tickets to push for crypto-friendly regulation in upcoming Senate races.
US Representative Ted Budd (R-NC), won his primary bid for a seat in the upper house of the legislature in June and will face off with Democrat Cheri Beasley in the November contest. Similarly, Blake Masters, a Peter Thiel-backed Republican, is competing against the incumbent Democrat Mark Kelly in Arizona.
A three-term congressman, Budd has introduced or supported a number of crypto-friendly bills over his time in office.
Meanwhile, Ohio is set to elect one of two pro-crypto candidates for its open senate seat. Rep. Tim Ryan (D) is a co-sponsor of the Keep Innovation in America Act, a crypto-friendly bill designed to maintain reasonable tax reporting requirements. His challenger, JD Vance, is another Thiel-backed Republican and venture capitalist that owns a sizeable amount of Bitcoin, who notably tweeted his vision for Ohio as: “pro-God, pro-family, pro-bitcoin.”
Another well-known figure in the crypto industry, Bruce Fenton, ran for the Republican nomination in New Hampshire before losing his bid last month.
“If the number of crypto-curious voters keeps rising, interest from politicians will inevitably keep growing,” the DC-based consultant argued. “Given demographic trends and adoption levels, it wouldn’t surprise me if crypto became a hot-button topic by the next election cycle.”
Crypto goes to DC
As crypto’s public acceptance has soared, the industry has started to target Washington DC much like its private sector predecessors did: by spending on lobbying and political campaign contributions to fund lawmakers who might eventually regulate it.
According to the Congressional Lobbying Disclosure database, the number of lobbyists representing crypto has nearly tripled over the last three years, jumping from 115 in 2018 (with 2.2 million spent) to 320 in 2021 (with $9 million spent).
The biggest lobbying spenders in the sector were Coinbase, Ripple Labs, and Blockchain Association, each of which spent over $2 million between 2018 and 2021.
Blockchain Association, a group that represents over 100 organisations in the industry, just formed its PAC last month with the hope of influencing and funding candidates interested in the crypto industry in future election cycles.
Blockchain Association PAC’s formation follows a massive surge in crypto lobbying and election funding, with super PACS with ties to the industry investing millions into the 2022 races.
As of July, crypto PACs invested over $31 million into the primaries. According to Roll Call, the industry spent at least $6.8 million lobbying Congress in the second quarter of 2022.
Boring, the CEO of the Chamber of Digital Commerce, points out there were 70 crypto-related bills introduced in the past Congressional session, calling it “a huge step forward” for the industry and that “the policy ideas and bills we’re seeing drafted indicate that we are on a good trajectory.”
“Enacting legislation is very hard, but we know – and policymakers know – that blockchain and digital assets are increasingly important to the US financial markets and the economy. It’s crucial that these important components of the global economy have clarity for the industry and certainty for investors,” Boring said.
A flurry of crypto-related legislation came on the heels of the Biden administration’s decision to issue an executive order in March, which directed agencies to research the benefits and risks of digital assets – a major milestone for the industry.
In June, bipartisan senators Cynthia Lummis (R-WY) – who is dubbed the Senate’s “crypto queen” – and Kirsten Gillibrand (D-NY) introduced the Responsible Financial Innovation Act, the first comprehensive legislative proposal to create a regulatory framework for digital assets in the US.
Many analysts believe that the legislation will set the tone for how Congress writes the rules for digital assets in the coming years. The bill would put the Securities and Exchange Commission (SEC) sister agency, the Commodity Futures Trading Commission (CFTC), which currently regulates Bitcoin and Ethereum futures, in charge of the whole crypto market.
Doing so would box out the SEC, which under the reign of chairman Gary Gensler has drawn ire from the industry for his tough stance on crypto.
For Boring, the industry’s collaborative efforts with policymakers are starting to foster a “constructive dialogue with regulators”.
“Our top priority is to establish a regulatory framework for our industry that encourages competitiveness while supporting consumer protections,” she added.