This year, a group of cryptocurrency industry executives innovated the way their companies supported the U.S. election. The results were remarkable, and their impact was far wider and deeper than the cryptocurrency industry itself.
Article written by: Sander Lutz
Source: Decrypt
Article compiled by: Ada, MetaEra
TL;DR
Crypto lobbying led by Coinbase, Ripple, and Andreessen Horowitz changes the political landscape in 2024.
The plan worked, but it also set a dangerous precedent.
How did this story come about? And what does it mean for crypto and the wider world? This is the core of Decrypt’s 2024 story.
It was December 2022, shortly after FTX collapsed, becoming a $32 billion bubble, and Sam Bankman-Fried was adjusting to life in a Bahamian prison ward. Meanwhile, Coinbase's Chief Policy Officer Faryar Shirzad harbored a cautiously optimistic sentiment.
Shirzad, with decades of experience in Congress and the White House, is an insider well-versed in the Washington political landscape. As the reputation guardian for Coinbase on Capitol Hill, the collapse of the crypto exchange FTX genuinely concerned him. However, at that specific historical moment, Shirzad's intuition made him believe that this scandal might, in some way, yield positive effects.
Shirzad revealed to Decrypt, "Although the FTX collapse presented many frightening aspects, it is undeniable that it could also bring about something we have long anticipated: a clear federal framework around the trading of crypto assets."
A well-known phenomenon is that whenever misconduct occurs in other industries, it often triggers a chain reaction of legislative reform in Washington. Companies like Coinbase have long yearned for a robust regulatory framework for cryptocurrency and welcome new laws that could reward compliant competitors.
However, contrary to expectations, such laws were never implemented. Over the next six months, most politicians adopted a cautious attitude towards the crypto industry, viewing it as politically toxic due to the complex and negative image that emerged after the FTX collapse. Meanwhile, a few progressive lawmakers seized the opportunity presented by the FTX downfall, using this landmark event as evidence of the inherently criminal nature of cryptocurrency, leading to a more stringent examination and resistance to the industry in related policy discussions and decisions.
Months ago, votes on crypto asset legislation were still precarious, but now they seem to have completely lost the chance of success, leaving no vitality.
It wasn't until mid-2023 that crypto policy leaders like Shirzad realized how drastically their situation had changed. Constantly striving to persuade lawmakers had led to repeated failures. The existing lobbying strategies of the crypto industry proved ineffective.
"We began to realize that despite all our efforts, it was all in vain," Shirzad stated.
"What we face is a political issue," he said. "To solve this political issue, we need a political solution."
It turns out that the solution implemented a corporate political spending strategy that had never before existed in U.S. history, costing about $300 million. This will drastically change the fate of the cryptocurrency industry within less than a year. Some experts believe this paves the way for influential corporations to exert unprecedented control over the U.S. political process.
"Go big or go home"
By fall 2023, leaders of wealthy cryptocurrency companies gradually reached a consensus that despite their differing political views and positions, they had no choice but to come together and ensure that their still-developing industry could survive in adversity. The policy experts from these companies took the lead, persuading their bosses to establish a cryptocurrency super PAC, even though such a strategy might come with many risks.
Super PACs were still a relatively new political tool at that time. They emerged from a 2010 U.S. Supreme Court ruling that allowed individuals and corporations to donate unlimited funds to support political candidates—as long as those funds were not directly used for campaign activities.
This innovation upended American campaigns the moment it was legalized. Political organizations, such as the pro-Israel lobbying group AIPAC, utilized super PACs as a means to reshape congressional campaigns with unprecedented funding.
Ideologically driven billionaires are also particularly fascinated by super PACs. Hye Young You, a professor at Princeton University who specializes in the history of campaign finance in the U.S., told Decrypt that between 2010 and 2022, sponsoring pro-Democrat or pro-Republican super PACs "became almost a political hobby," an activity of the wealthy elite in America.
However, throughout the campaign, the business community largely adopted an avoidance attitude toward super PACs.
Why? In fact, political action committees often carry an anti-democratic stigma in American societal perception, and they are commonly associated with partisan strife—this controversy is likely to alienate some of the company's customer base. As a result, top industries in the U.S. largely view it as a losing proposition, believing the problems it brings outweigh the value it generates.
"Surprisingly, in past situations, corporate and industry sponsorship of specific super PACs was so minimal," she said, "until this election, when it finally changed."
In the fall of 2023, leaders from three major companies debated whether to support the cryptocurrency super PAC, realizing that this strategy was not only untested but also risky. The three companies were leading U.S. cryptocurrency exchange Coinbase, crypto payment company Ripple, and Silicon Valley venture capital giant Andreessen Horowitz.
What if the crypto industry fails to attack major political figures, or if excessive politicization damages brand reputation?
Later in 2023, the cryptocurrency industry faced increasingly severe circumstances, as the U.S. Securities and Exchange Commission (SEC) took comprehensive and vigorous regulatory measures against various crypto projects. Any attempts to respond with reforms seemed far safer than inaction, akin to a desperate struggle for survival.
Ripple's Chief Legal Officer Stuart Alderoty stated, "We have invested $150 million to respond to the SEC's lawsuit. We certainly know that unreasonable policies come at a high cost."
"Go big or go home."
Leaders from Ripple, Coinbase, and Andreessen Horowitz made a resolute decision to strengthen their power to unprecedented levels.
They contacted the operators of Fairshake, a newly established cryptocurrency super PAC with limited funds and reputation. After investigating Fairshake's leadership (which lacks experience compared to other top super PACs), they concluded that the plan was viable—as long as all participants reached consensus on a few fundamental issues vital for the future.
If Ripple, Coinbase, and Andreessen Horowitz poured substantial funds into Fairshake, would they have the courage to confront powerful incumbent legislators? After some deliberation, the answer is yes. Could they also reach consensus on a bipartisan candidate list to ensure the coalition's longevity? The answer is still yes. What if it means abandoning traditionally industry-friendly Republicans to support pro-crypto Democrats?
What followed was more discomfort and entanglement—but ultimately, the answer remained affirmative, regardless of the costs, with a determined resolve.
In September 2023, Coinbase CEO Brian Armstrong donated $1 million to Fairshake. The following month, Marc Andreessen and Ben Horowitz donated $2.5 million each. In November, Coinbase donated $5 million. By Christmas, Andreessen and Horowitz donated another $14 million; Coinbase donated another $15.5 million. Ripple, like these two companies, contributed $20 million to the fund.
Ripple's Alderoty remarked, "No matter how you look at it, that's a considerable amount. But considering other options, it seems like a reasonable decision."
By early 2024, Fairshake had successfully raised nearly $85 million, breaking records for corporate fundraising in super PACs: after all, the National Association of Realtors raised a relatively meager $18 million in 2022.
By the eve of the 2024 presidential election, Fairshake and its affiliated political action committees will have raised nearly $300 million.
"Crypto Voters" and "Corporate Money Death Star"
Participants held differing views on the direction of the subsequent story. What is certain is that when the 2024 elections commence, the vast majority of Democratic legislators will show opposition to cryptocurrency lobbying efforts, although some Republicans express support, the majority maintain a contradictory stance.
By May, cryptocurrency had become a steadily rising enterprise in the entire political field, with its inherent influence and substantial financial strength playing a crucial role in elections, becoming an undeniable force that could sway the outcomes.
Leaders of the crypto policy movement emphasized that this transformative change was primarily due to a grassroots movement initiated by Coinbase. This movement aimed to activate so-called crypto voters and demonstrate to lawmakers how many Americans were willing to support or oppose candidates based on their cryptocurrency stance.
Fairshake's spending history tells a different story. In February, this super PAC spent over $10 million, successfully taking down Congresswoman Katie Porter (Democrat from California), a candidate for the U.S. Senate seat in California.
Fairshake's financial strength is significant in multiple aspects. The most crucial point is its enormous scale. According to Open Secrets, spending against Porter was over 20 times higher than her own positive ad spending.
Secondly, Porter is not particularly opposed to cryptocurrency; she has rarely, if ever, spoken on the subject. But she is a protégé of Senator Elizabeth Warren, a staunch critic of cryptocurrency. Clearly, the association with Warren is enough to trigger significant spending from the cryptocurrency industry.
"Porter did not truly oppose cryptocurrency, but they launched an attack on her," said Rick Claypool, research director at Public Citizen (a nonprofit organization advocating for consumer rights), to Decrypt. "This caused panic among candidates."
This spring, Congress held several key votes related to cryptocurrency: the House voted on FIT21 (a potential regulatory framework for the cryptocurrency market), and both chambers voted to repeal SAB 121 (a rule by the SEC discouraging banks from holding cryptocurrencies).
While both bills, once signed into law, would have a tangible impact on the cryptocurrency industry, their deliberation in May served a more important purpose: as a litmus test for lawmakers' positions on digital assets.
Months ago, Fairshake indicated its intention to invest heavily in the elections. Crucially, when FIT21 and SAB 121 were submitted to Congress, these tens of millions of dollars had not yet been used to support or oppose any election candidates.
During the spring congressional voting period, Fairshake's campaign funding loomed over Capitol Hill, "like a corporate money death star," Claypool from Public Citizen remarked.
The results were dramatic: 71 House Democrats, including Nancy Pelosi, broke with President Joe Biden and passed FIT21. Twelve Senate Democrats, including then-Senate Majority Leader Chuck Schumer, defied Biden's opposition and passed the bill to repeal SAB 121 (which the president subsequently vetoed).
Democrats facing elections in 2024 showed a significant shift. For example, a month before the vote on FIT21 and SAB 121, Congresswoman Elissa Slotkin was campaigning for a highly competitive U.S. Senate seat in Michigan. She received an "F" rating on Coinbase's "Support Cryptocurrency" oversight website.
Then, she supported both initiatives at the end of May. Soon, her "Support Cryptocurrency" rating was upgraded to an "A."
In September, Fairshake chose to invest millions in Slotkin, opposing her Republican challenger, who had long publicly supported cryptocurrency. Ultimately, Slotkin won Michigan's Senate seat by a narrow margin of less than 0.34%.
Most leaders in the cryptocurrency industry participating in Fairshake's operations believe that the shift in political figures like Slotkin proves the importance of cryptocurrency in the American public's eyes.
"I believe that once Democrats clarify this, they will make a more definitive choice," said Josh Vlasto, spokesperson and strategic advisor for Fairshake, to Decrypt, "We can accept and embrace this technology that our voters clearly support and are clearly engaged with."
However, in an election year defined by hot-button issues like inflation, immigration, reproductive rights, and the war in Gaza, it remains unclear whether cryptocurrency became a high priority for any significant voter group. Slotkin's Republican opponent Mike Rogers previously revealed to Decrypt that despite his strong support for the cryptocurrency industry, the topic was hardly mentioned in the 2024 Michigan campaign.
Some believe that Fairshake's ad purchases exposed the fact that cryptocurrency lacks grassroots support. In 2024, Fairshake and its affiliates spent over $133 million in 68 congressional campaigns; nearly none of this record spending went toward ads mentioning cryptocurrency.
Decrypt found no evidence that any of the election ads purchased by Fairshake mentioned cryptocurrency or digital assets; when asked repeatedly, the super PAC was also unable to provide evidence of such ads.
The election ads Fairshake purchased focused instead on issues like border security and crime, cost of living, and infrastructure.
"That makes me wonder," said Rick Claypool from Public Citizen. "If they're convinced that they can achieve their goals solely by mobilizing the cryptocurrency community, why didn't they tell that story in the campaigns they presented to voters?"
Fairshake's Josh Vlasto countered this conclusion. He acknowledged that most of the ads purchased by the PAC did not discuss cryptocurrency, but Vlasto insisted that it is common practice for special interest groups to run ads unrelated to their own mission.
"This is a testament to effectiveness," he said. "If you plan to invest significant resources and support candidates you believe in, do it in a way that helps them win their campaigns."
The dream scenario for cryptocurrency
Before November, everything seemed to be going smoothly for Fairshake—or as smoothly as possible in this election that was destined to be lopsided.
First, almost all congressional candidates in the intensely contested areas seemed to support the industry's agenda. Second, Fairshake supported a range of outspoken Democratic and Republican candidates in the elections. While this action did cause discontent and led some to switch parties, it did not create any significant rifts among the core major donors of the super PAC.
Furthermore, although Fairshake wisely chose not to engage in the highly polarized presidential campaign, both Donald Trump and Kamala Harris expressed support for cryptocurrency-related initiatives before the election.
However, even the operators of Fairshake were unprepared for the stunning victory the super PAC achieved on November 5.
Fairshake not only defeated cryptocurrency skeptics and Senate Banking Committee Chairman Sherrod Brown (Democrat from Ohio) with ad spending of up to $40 million but also secured its most coveted "trophy"—almost all the election candidates it supported won.
Whether Democrat or Republican, rural representative or urban senator, the clearest data-driven conclusion on election night is: if you received Fairshake's support, you were likely to be elected.
With Donald Trump winning re-election after fully supporting cryptocurrency and the Republican Party promising to pass digital asset legislation immediately after gaining majorities in the House and Senate, you get a dream scenario for the cryptocurrency industry that sounded like a pipe dream just a year ago.
The major donors of Fairshake quickly dismissed any theoretical regrets about political backlash or excessive campaign spending.
From an investment perspective, the massive spending by Fairshake's major donors has yielded incredible returns. For instance, according to Open Secrets, Ripple spent $63 million in the 2024 elections. The XRP (a cryptocurrency developed with the help of its founder) staked by the company has appreciated by more than $100 billion since election day.
From all angles, the regulatory outlook for cryptocurrency in the U.S. seems more optimistic than ever. However, from a broader perspective, the potential impact of Fairshake's strategy beyond cryptocurrency appears more severe.
Rick Claypool from Public Citizen indicated that he expects other business sectors to try to replicate Fairshake's strategy, as the super PAC has brought such a significant return on investment for donors. He stated that these actions could easily surpass cryptocurrency in scale and impact, posing significant issues for democracy.
"Overall, the influence of cryptocurrency is not extremely significant," he said. "If other industries or multiple industries play the same election game, raising funds to secure favorable positions in Congress, it becomes even harder to pass issues that the public cares about but do not align with specific industry profit motives."
Fairshake's Jose Vlasto disagreed with the notion that "money is the only factor." He insisted that his team's thoughtful and focused strategy was equally crucial to their victory.
"It's not just about money," Vlasto said. "It's really not just about money."
Meanwhile, Hye Young You from Princeton University has complex and contradictory feelings about the historic victories cryptocurrency might achieve in 2024.
"On one hand, the massive funding and the potential policy outcomes it may bring are concerning," she said.
On the other hand, she has monitored many political action committees in her work and couldn't help but feel particularly concerned about Fairshake. After all, she holds some Bitcoin.
