Congressional elections critical for crypto’s future in the US

Crypto entered the United States political arena in a big way in 2024. 

Fairshake, the industry’s super political action committee (PAC), has already raised $119 million, primarily from corporate crypto donors. 

Yet perhaps counterintuitively, little, if any, of this historically large sum will be spent on the presidential clash between Vice President Kamala Harris and former President Donald Trump.

It is almost all going to “down ballot” contests, i.e., races for seats in the US Senate and House of Representatives — particularly those face-offs that pit a crypto supporter against a traditional crypto skeptic, like the duel between Senator Sherrod Brown and challenger Bernie Moreno in Ohio.

Why down-ballot races matter

How do you explain the industry’s focus on Senate and House races? 

For Ripple, one of Fairshake’s largest donors, the answer is clear. As Lauren Belive, Ripple’s head of US policy, told Cointelegraph:

“For the crypto industry, this election isn’t about choosing one party over another — this is about supporting candidates who recognize that the US needs to support innovation, or it will continue falling behind other major global financial centers.”  

US laws are introduced, amended and ratified in the Senate and the House of Representatives, so when it comes to the future market structure of cryptocurrencies and Blockchain technology, the composition of the legislative branch matters.

“The race to the White House always draws the biggest headlines, but the day-to-day policy battles for the industry have largely been in Congress,” Ron Hammond, director of government relations at the Blockchain Association, told Cointelegraph, adding: 

“That trend will likely continue for the next four years as many regulatory pain points facing the industry require updating laws dating back 90 years ago for this new technology.”

Thus, Fairshake, which didn’t announce its first wave of fundraising until December 2023, has taken pains to present itself as an equal-opportunity crypto supporter — favoring neither Democrats nor Republicans per see. 

Its approach appears to be working.

The amount of money that crypto corporations have spent in this election cycle places them among the biggest corporate political spenders since the US Supreme Court’s 2010 Citizens United decision.

This enabled corporations and other outside groups to spend unlimited funds on elections, Rick Claypool, research director, president’s office at Public Citizen, told Cointelegraph, adding: 

“The scale of crypto’s corporate political spending is shocking.” 

In point of fact, “They are dominating corporate spending in 2024 — with nearly half of all corporate money in this election so far coming from crypto corporations — and as a sector are second only to fossil fuel corporations, in terms of all corporate political spending since 2010,” commented Claypool.

Which are the critical congressional races for crypto?

So, what are the key contests that industry supporters (and foes) should be watching? 

“Follow the money” is an old political adage that, if applied to the 2024 election, might lead straight to Ohio.

There, Moreno, the Republican Party challenger and founder of a blockchain firm, is trying to unseat incumbent Brown, a crypto skeptic and powerful chairman of the Senate Banking Committee.

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Fairshake is allotting $12 million to Moreno’s campaign, four times more than it is sending to any other Senate contest. 

“Yes, the Ohio Senate race is one of the most significant contests this cycle,” Perianne Boring, founder and CEO at The Digital Chamber, told Cointelegraph. “Chair Sherrod Brown, a career politician with over 30 years in office, has played a major role in blocking progress for the crypto sector.” 

Many people think investing in cryptocurrency means big returns with zero risk.

But we’ve seen thousands of scams and spectacular blowups in the crypto markets, exposing how bad actors are costing Americans millions of dollars and putting their savings and livelihoods at risk. pic.twitter.com/K3wjzxrM5p

— Senate Banking and Housing Democrats (@SenateBanking) July 28, 2022

The Lummis-Gillibrand Responsible Financial Innovation Act (S.2281), a bipartisan market structure bill, “has been stalled in the Senate for over four years,” continued Boring, adding:

“Why has Chair Brown [...] who has held this role for the past four years, refused to bring the bipartisan market structure bill to a markup?” 

She noted that Brown resisted even after S.2281 gained the support of his own Senate Majority Leader, Chuck Schumer.  

Apart from Ohio — and as evidence that Fairshake isn’t just boosting Republicans — the super PAC also announced in August that $3 million would be spent in Arizona and Michigan each in support of Democratic party candidates Representatives Ruben Gallego and Elisa Slotkin, respectively. 

Further driving home the bipartisan message, Fairshake also reported in August that television advertising time was being reserved for nine Democratic Party House candidates and exactly the same number of Republican Party House candidates.

Committee “chairs” are worth fighting for

These down-ballot contests are important because, among other reasons, “whichever party is in the majority will get to select committee chairs for that chamber,” George Leonardo, founder of Cap Hill Crypto, told Cointelegraph.

Whichever party controls these chairs sits “in the driver’s seat” when it comes to setting policy priorities and crafting the specifics of legislation, said Leonard. “They will play a key role in the future of crypto policy in the next Congress.” 

It has been significant that House Financial Services Chair Patrick McHenry has made digital assets a priority in the current Congress, “while Senate Banking Chairman Sherrod Brown has not,” noted Leonardo. 

According to the Blockchain Association’s Hammond, “If the Democrats flip the House, it’s likely Representative Maxine Waters will return as Chair of the pivotal [House Financial Services Committee], and while she has been less open to market structure efforts, she has long been engaged on bipartisan stablecoin legislation and likely would push for similar legislation if she were at the helm.”

Meanwhile, on the Senate side, “the prospects of a Senate Republican majority could spur other legislative developments for the industry, especially on the heels of Senator Tim Scott’s announcement of establishing a crypto subcommittee should Republicans win,” Hammond added. 

Elizabeth Warren as potential Senate Banking chair

There are other interesting scenarios. “If Senator Brown loses, you could have a situation where Senator Elizabeth Warren is the top Democrat on Senate Banking,” noted Leonardo, though this also assumes that Democratic Senator Jon Tester loses in Montana, Senator Mark Warner stays on as Senate Intelligence chair, and Jack Reed remains chair of the Senate Armed Services Committee, Leonardo continued.

“Of course, in this scenario, Republicans would likely control the Senate, so Senator Warren would be the ranking member, not the chair,” added Leonardo. 

In any event, the Ohio race “may serve as a good barometer for just how strong the crypto voting bloc is in a battleground state.”

Boring is also watching the Senate race in Massachusetts that pits Warren against Republican John Deaton, given that Warren has “become the loudest voice in the anti-crypto movement.” According to Boring:

“The most critical focus this election cycle is on defeating the ‘anti-crypto army,’ led by Senator Elizabeth Warren. It’s essential to send a clear message to Washington that the American people reject efforts to suppress blockchain innovation.”  

Boring is also tracking the Senate contest in Pennsylvania where Republican Dave McCormick is challenging Senator Bob Casey.

McCormick “strongly supports crypto,” according to Stand With Crypto, while Casey has been “neutral” on crypto. 

“Each of these races will shape the future trajectory of crypto legislation,” said Boring.

Is the presidency even relevant?

Some claim that the growing bipartisan crypto groundswell means that market structure reform is coming to the US — no matter which party captures the White House.

As Nic Carter recently told Cap Hill Crypto: “If Republicans carry the Senate, it’s virtually guaranteed that we get meaningful clarifying legislation — and even in the case of a Harris victory, the Genslers of the world would not be confirmed.”

But this may be wishful thinking. As important as the Senate and House races may be, they don’t guarantee a positive outcome for the crypto sector.

“It absolutely matters who wins the White House,” said Boring. “On one side, we have Donald Trump running on a pro-crypto platform. If Trump wins and follows through on his campaign promises, there’s a real opportunity not only to pass a market structure bill but also to focus the entire administration on supporting and incentivizing blockchain development and investment in the US.”

“On the other hand, Vice President Harris has yet to make any clear statements on digital assets. Without a defined policy position, we have to assume the Harris campaign’s stance reflects the current Biden/Harris administration’s approach, which has effectively outsourced digital asset policy to Senator Elizabeth Warren,” said Boring. 

“The White House definitely matters,” Leonardo told Cointelegraph. It’s virtually guaranteed that neither party will have the two-thirds majority needed to overcome a presidential veto were the president to object to a crypto bill — whether that be Harris or Trump — so “the White House would need to be on board with any legislation.” 

Control of the US House of Representatives. Source: Ballotopedia

The president also appoints cabinet officers, including the secretary of the Treasury, as well as agency heads for the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) — all of which can affect crypto and blockchain adoption.  

“As we’ve seen over the last few years, federal agencies like the Treasury (through tax and illicit finance rules), the SEC (through SAB 121 and regulation by enforcement), the CFTC (through enforcement actions against decentralized finance actors like Ooki DAO and Uniswap), and banking regulators (see Operation Chokepoint 2.0) play a significant role in impacting the legal environment in which crypto builders and users must operate,” said Leonardo.

Confirming regulators and exerting oversight of federal agencies has been important in the current administration “and will be for the next, regardless of who wins the White House,” Blockchain Association’s Hammond noted. 

Why Fairshake hasn’t endorsed a presidential candidate

Public Citizen’s Claypool was asked if he was surprised that Fairshake had avoided endorsing a presidential candidate — especially given that the holder of the Oval Office could ultimately veto any crypto reform legislation. 

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This seems to be a somewhat tricky affair. Fairshake’s claims of bipartisanship, after all, would be “less credible” if it were to intervene in the presidential race, Claypool answered. Moreover:

“The even partisan split between the House and the Senate gives Fairshake a lot of leverage — but it also means they can’t really afford to alienate either party.”

But for now, Fairshake is sitting high in the saddle.

“The scale of the spending combined with the strategy of targeting contested races means crypto’s spending threatens to influence individual House and Senate races and, because of the narrow partisan split, potentially tip control of Congress toward one party or the other,” Claypool said.