A major beneficiary of this U.S. presidential election: cryptocurrency

Author | Joe Light

Editor | Yu Zhou, Barron's

Cryptocurrency companies plan to inject a significant amount of cash into the 2024 U.S. presidential election, and there are already signs that this funding is helping the industry gain more friends in Washington. Bitcoin and other tokens, as well as trading platforms like Coinbase Global (COIN), will benefit.

According to insiders, this week, executives from the cryptocurrency industry are planning to raise campaign funds for Senate Finance Committee Chairman Ron Wyden, a Democrat from Oregon, and Senate Banking Committee member Bill Hagerty.

The two senators, along with other lawmakers, spoke at the cryptocurrency news site CoinDesk's Consensus conference in Austin, Texas. Hagerty's spokesperson did not respond to requests for comment from reporters.

A spokesperson for Wyden stated that the senator "has consistently called for consumer-centric regulations on cryptocurrency issues" and opposes regulations targeting technology rather than criminal individuals.

Previously, cryptocurrency company Ripple Labs announced on Wednesday, May 29, that it would donate an additional $25 million to the pro-cryptocurrency super PAC Fairshake, having already donated $25 million in 2023.

The cryptocurrency industry has a long list of expectations from the government and Congress. Companies including Ripple and Coinbase are battling lawsuits with the U.S. Securities and Exchange Commission (SEC) over alleged violations of securities rules. They and other companies deny these allegations and state that Congress needs to pass legislation clarifying how the industry can operate legally in the country.

Ripple CEO Brad Garlinghouse stated in a statement accompanying the announcement: "As non-elected regulators actively seek to hinder innovation and economic growth that millions of Americans rely on, Ripple will not remain silent, and neither should the cryptocurrency industry," adding, "The cryptocurrency industry intends to continue investing heavily in this effort until we see meaningful change."

A report released this month by Public Citizen shows that during this election cycle, political action committees led by the cryptocurrency industry have raised over $100 million. Public Citizen is a consumer advocacy organization that frequently criticizes the cryptocurrency industry.

The organization noted that this figure ranks third among all super PACs participating in the 2024 election. The report states that major donors to the crypto PAC include Ripple and Coinbase, as well as executives from venture capital firm Andreessen Horowitz and trading platform Gemini Trust co.

Politicians have taken notice. This month, Democrats, despite the White House's veto threats, crossed the aisle to help Republicans pass a resolution to overturn SEC guidance that makes it harder for banks to regulate cryptocurrencies. Last week, 71 House Democrats and Republicans voted together in support of an industry-backed bill that would limit the SEC's authority over cryptocurrency trading.

Unexpectedly, the SEC approved rule changes that paved the way for Ethereum exchange-traded funds (ETFs) to become the first cryptocurrency spot funds, while most Democrats who previously criticized similar decisions remained silent.

Meanwhile, former U.S. President Donald Trump has directly called on cryptocurrency donors on multiple occasions. His campaign team began accepting crypto donations starting last week.

"I am very positive and open regarding cryptocurrency companies and everything related to this emerging industry," Trump wrote on "Truth Social" last weekend.

TD Cowen analyst Jaret Seiberg wrote in a research report this week that recent events indicate, "This spending has already brought returns to cryptocurrency."

For investors in tokens and their trading platforms, a more lenient regulatory environment would be a welcome relief. Analysts suggest that failures in the SEC cases could force Coinbase to delist some token trades and cease offering other products in the U.S.

On the other hand, a more relaxed regulatory stance could make it easier for traditional Wall Street firms to invest in and offer products related to Bitcoin and other cryptocurrencies, thereby increasing demand and supporting prices.

By Washington standards, over $100 million is a significant amount of cash, but for this industry, it could be well worth the expenditure.