How cryptocurrency is poised to influence elections

Ryan Selkis, a cryptocurrency executive, was dining at Mar-a-Lago last month when he received an unexpected invitation: Former President Donald J. Trump wanted him to come on stage and say a few words.

Selkis, who runs crypto data firm Messari, was one of about two hundred attendees at an event celebrating Trump's series of non-fungible tokens, the digital collectibles known as NFTs. As he reached the lectern, Mr. Selkis turned to the former president.

“There are 50 million cryptocurrency holders in the United States,” the executive said. “That's a lot of voters.”

This message has become a political talking point in the cryptocurrency world, as the industry tries to shake off a wave of scandals and establish itself as a powerful force in the 2024 election cycle. Three major crypto firms have teamed up to fund a group of affiliated super PACs, investing approximately $150 million to elect pro-crypto candidates in congressional races.

The PACs do not intend to participate in the presidential election, a spokesperson for the groups said. But top cryptocurrency executives have tried to rally the industry behind Trump, who has reciprocated by praising digital currencies and hosting executives at Mar-a-Lago.

Many cryptocurrency supporters see the 2024 election as a pivotal moment. After the collapse of a number of crypto firms two years ago, the Biden administration launched an aggressive crackdown, filing lawsuits and criminal charges against some of the industry's leading figures. The Securities and Exchange Commission is pursuing cases that could effectively force the cryptocurrency industry out of the United States.

“The 2024 election will be the most important in the history of cryptocurrencies,” said Brad Garlinghouse, CEO of Ripple, a cryptocurrency company that has been feuding with the federal government for years. “You're seeing technology become a partisan political issue.”

Garlinghouse, Selkis and other executives have argued that newly energized “crypto voters” could influence the outcome of the election. They often cite a survey, commissioned by cryptocurrency exchange Coinbase, that suggests 52 million Americans own digital currencies. (The Federal Reserve estimates that the total represents 7% of the adult population, or about 18 million people.)

But voters' supposed passion for cryptocurrencies may be less important than the industry's campaign war chest. Ripple, Coinbase and venture capital firm Andreessen Horowitz have each donated about $50 million to crypto PACs, which plan to spend those funds on several competitive Senate races. In March, the largest PAC, Fairshake, spent about $10 million on attack ads against Rep. Katie Porter, a Democratic candidate in the California Senate primary who was allied with Sen. Elizabeth Warren, a longtime crypto critic . Mrs. Porter lost her race.

“A single, relatively small industry is literally trying to buy enough politicians to hijack the public agenda,” said Dennis Kelleher, president of Better Markets, a financial reform advocacy group. “It's truly breathtaking.”

The industry's vast resources have turned a number of niche issues into a talking point in the presidential campaign. Robert F. Kennedy Jr., the independent presidential candidate, made his first official campaign appearance at a Bitcoin event in Miami, and has attended numerous industry conferences, sometimes holding fundraising meetings with wealthy executives on the sidelines .

President Biden has long been considered anti-cryptocurrency because his SEC chairman, Gary Gensler, has sued so many crypto companies. But some Biden supporters, including investor Mark Cuban, have insisted his campaign is mending fences.

The campaign was receptive to the message, Mr. Cuban said in an email. In recent weeks, Biden officials have reached out to Coinbase and Ripple, asking to discuss cryptocurrency policy, four people familiar with those discussions said.

However, much of the industry appears to be coalescing around Trump. Although the former president once said that Bitcoin “looks like a scam” and has often been critical of the tech sector, he has made several supportive comments about cryptocurrencies in the past month, vowing to end the regulatory crackdown. On Tuesday, Trump met at Mar-a-Lago with executives from some of the world's largest Bitcoin mining companies, including Marathon Digital and Riot Platforms.

Bitcoin should be “MADE IN USA!!!” he posted on his social network.

The last time the cryptocurrency industry spent large sums on a political race, its top donor was Sam Bankman-Fried, the founder of FTX, who spent tens of millions of dollars supporting both Democrats and Republicans in the 2022 midterm elections. Two years later, Mr. Bankman-Fried's company is bankrupt and he is serving a 25-year prison sentence for fraud.

The collapse of FTX was a huge setback to the cryptocurrency industry's efforts in Washington. Last year, the SEC sued Coinbase and other cryptocurrency companies, claiming that the digital assets they allowed customers to buy and sell were unregistered securities. In May, the industry scored a rare legislative victory when Congress voted to overturn an SEC accounting guideline that crypto firms had challenged. Mr. Biden vetoed the resolution.

Now the industry is reacting. Fairshake has announced plans to enter four more Senate races this year, including close races in Ohio and Montana, where Democrats who have criticized cryptocurrencies are running for re-election. Privately, cryptocurrency executives credited Fairshake with mollifying some skeptical lawmakers, including Sen. Sherrod Brown, the Ohio Democrat, according to two people familiar with the conversations. Brown, who is the chairman of the Senate Banking Committee, said in April that he was open to introducing an industry-backed bill.

A few weeks after the California Senate primary in March, Representative Adam Schiff, the Democrat who defeated Ms. Porter, visited Coinbase's offices in Mountain View, California. He met with representatives from Coinbase, Andreessen Horowitz and cryptocurrency-focused investment firms Electric Capital, Paradigm and Haun Ventures, two people familiar with the meeting said.

Mr. Trump has not always been a supporter of cryptocurrencies. He said he preferred dollars to Bitcoin and in 2019 tweeted that digital currencies were “based on nothing.” But lately, some crypto executives, looking for a political savior, have embraced it.

Vivek Ramaswamy, a cryptocurrency enthusiast and former presidential candidate, has claimed credit for Trump's guidance on cryptocurrencies and has carved out a role as his emissary in the industry: On Wednesday afternoon, Ramaswamy met privately with Coinbase CEO Brian Armstrong , at the Capitol Hill Club in Washington and encouraged him to support Trump's campaign, a person familiar with the meeting said.

Mr. Armstrong has not publicly endorsed a presidential candidate. “We will not give special treatment to any particular party,” he said in a statement. “Cryptocurrencies are a truly bipartisan issue.”

Mr. Selkis, who identifies as a libertarian, attended the Mar-a-Lago event in May after receiving a card from a colleague who was unable to come. “I'm eating my salad and I get cold-called on stage by the president,” Selkis recalled in an interview.

That night, Trump declared, “If you are for cryptocurrencies, you better vote for Trump.” He also announced that his campaign will accept digital currency donations and pledged to commute the life sentence of Ross Ulbricht, a cryptocurrency cult hero who ran the Silk Road online drug market.

On Tuesday evening, Trump met for more than an hour with about 15 Bitcoin mining executives at Mar-a-Lago, according to one of the attendees, Salman Khan, chief financial officer of Marathon Digital.

At one point, Khan said, executives showed Trump the inside of a machine used for mining Bitcoin, an energy-intensive process that has raised environmental concerns. “He liked the made-in-America thing,” Mr. Khan said.

Not everyone in the cryptocurrency world agrees with Trump. At a conference in May, Marvin Ammori, a Democrat who works for the cryptocurrency company Uniswap, discussed the industry's political strategy on stage with Selkis, warning that Trump may not deliver on his campaign promises.

However, this month, Trump attended a fundraiser at the home of David Sacks, a prominent venture capitalist in San Francisco, and reiterated his support for cryptocurrencies, according to three people in attendance. Among the guests were Mr. Selkis, crypto executives Tyler and Cameron Winklevoss and Paul Grewal, Coinbase's chief legal officer, the sources said.

“The cryptocurrency vote has already been won by President Trump,” Selkis said. “It's over.”

Shane Goldmacher contributed to the reporting.

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