In May, the U.S. Congress voted in favor of two pro-cryptocurrency bills for the first time after years of political deadlock. Observers were stunned by the support from leading Democratic figures, who objected to directives from the White House.
Combined with last week’s approval of an Ethereum ETF and pressure from a suddenly crypto-friendly Donald Trump, experts are now wondering whether crypto voters not only have enough power to influence November’s presidential election — but whether they already have.
The sudden shift in Democrats’ stance — with the White House now saying it’s willing to negotiate on legislation — suggests they may be trying to prevent losing votes on the issue.
The issue gained traction in the Senate on May 16 when a bipartisan coalition of 60 senators, including Democratic Majority Leader Chuck Schumer, voted to overturn a Securities and Exchange Commission rule called SAB-121 that would have prohibited banks from holding cryptocurrencies on behalf of their customers.
The move surprised observers, who did not expect so many Democrats to ignore President Joe Biden's threat to veto the bill.
The Partisan Shift: How Crypto Voters Are Redefining 2024 Election Strategy
Republican Senator Cynthia Lummis of Wyoming, a longtime defender of the cryptocurrency industry, said on the Unchained podcast last week that she believed the vote was an unwelcome shock to Biden’s White House staff and that the political upheaval could prompt the White House to “reconsider” the president’s veto threat.
“I don’t think they anticipated how strong the bipartisan vote on this would be,” Loomis said, adding that she believes encryption legislation will eventually pass now that there are bipartisan majorities in both chambers.
A week later, House lawmakers seized the moment and, with the help of 71 Democrats, including former House Speaker Nancy Pelosi, led a Republican effort to pass the Financial Innovation and Technology for the 21st Century Act (FIT21).
The legislation would allow cryptocurrency projects to “certify” that their tokens are commodities — moving them from the regulatory purview of the Securities and Exchange Commission to the Commodity Futures Trading Commission.
The development came as a surprise because until May, all signs indicated that Democrats would not pass specific crypto legislation this year. Prominent Democrats opposed each proposal — including Massachusetts Sen. Elizabeth Warren and California Rep. Maxine Waters, the ranking member of the Financial Services Committee that developed FIT21. The White House expressed opposition to FIT21 in a statement, and Biden’s SEC Chairman Gary Gensler also strongly opposed the proposal.
Gensler’s own agency made the biggest headlines this month with its shocking last-minute announcement that it would move forward with approval for eight ether spot exchange-traded funds.
Crypto Voters: The New Battleground in the 2024 Presidential Election
Some observers believe that growing political pressure has forced Democrats to reconsider their stance on the cryptocurrency industry. “The tone of the SEC… literally changed overnight,” Coinbase President Emilie Choi said at a JPMorgan event on May 21. Choi speculated that agency officials had sensed “some panic in parts of the government.”
Ryan Eagan, deputy director of federal affairs at the Washington, D.C.-based advocacy group Crypto Innovation Council, agreed, telling Cointelegraph that he believes the Democratic Party’s stance on the issue is shifting due to public sentiment.
“It’s clear that the Democratic Party is listening to the voters,” Egan said.
“The crypto community’s desire for a clear regulatory framework could impact congressional and presidential races in states where the difference is only tens of thousands of votes.”
Matt Hougan, chief investment officer at Bitwise Asset Management, expressed a similar sentiment last week on the Bankless podcast. “I think there’s been a sea change in Washington,” he said, noting that “Democrats have crossed party lines.”
He added: “There is clearly a political element to this.”
But pro-crypto Democrats have a different view. Representative Wiley Nickel, a North Carolina Democrat who co-sponsored FIT21 and the repeal of SAB-121, told Cointelegraph that cryptocurrency is not a “partisan issue.”
“I think there are a lot of Democrats in the House and Senate who understand that we need to support the next generation of digital asset innovators,” Willey said.
He added that the issue "will see me and others — Nancy Pelosi — engage in a bipartisan way."
Crypto Voters’ Influence on Election Results
While suggesting the issue is bipartisan, Nickell acknowledged that the May vote was unprecedented, marking “the first vote on cryptocurrency regulation in our nation’s history.”
The SAB-121 vote marked an unexpected turning point, especially considering it came despite a threatened veto by the president.
Just days ago, a poll by the Digital Currency Group showed that a quarter of voters in swing states consider cryptocurrency to be an important factor in their vote.
According to Loomis, this long-promised veto threat not only failed to convince those Democrats, but it also caused the growing crypto community to intensify its opposition to the party, with many publicly stating that they would become single-issue voters against Biden.
Celebrity billionaire entrepreneur Mark Cuban endorsed Biden in 2020 and is backing him again this year. But he has been harshly critical of Gary Gensler’s stance on cryptocurrency and the threat it poses to Biden’s shaky reelection campaign. He wrote on X in early May:
“Cryptocurrency is mainstream among young and independent voters. Gensler has yet to protect a single investor from fraud.”
The Shark Tank star wrote that this was a "warning to Congress" and suggested that Democrats "solve this issue for Biden by passing legislation defining registration unique to the crypto industry."
Anthony Scaramucci, a former Trump White House press secretary and current Biden supporter, called the president’s threat to veto repealing SAB-121 “the latest in a series of unforced anti-encryption mistakes by the Biden-Warren administration that could cost them the election.”
He attributed the shift in Democratic attitudes on various encryption issues over the past week to a growing realization that opposing encryption doesn’t win many votes.
“I think the Biden administration is looking at the polling data and recognizing that young people use crypto, the Hispanic community, the African American community use crypto. Do you really want to fight crypto so hard? I don’t think it makes sense from an electoral perspective.”
Cryptocurrency’s impact on voters in swing states
The Senate voted to repeal SAB-121, with Majority Leader Chuck Schumer joining 11 Democrats in voting with Republicans to repeal the bill — despite a veto threat from the president.
Five of them are from swing states: Sens. Bob Casey of Pennsylvania, Mark Kelly of Arizona, Mike Peters of Michigan, Jackie Rosen of Nevada and Jon Tester of Montana. Arizona Sen. Kyrsten Sinema, an independent who caucuses with Democrats, also voted for the bill.
Galaxy founder Mike Novogratz, who donated more than $1 million to the Biden election in 2020 and backed Minnesota Rep. Dean Phillips’s unsuccessful attempt to defeat Biden in this year’s Democratic primary, said on an earnings call this month that the administration had created an “unfair” impression that most Democrats were against cryptocurrencies.
“There are a lot of Democrats who support cryptocurrencies,” he said, but he added that “the power is in the hands of Elizabeth Warren, Gensler, and a few others on the Senate Banking Committee.”
Former President Trump Seizes Crypto Voter Opportunity
Former U.S. President Donald Trump, who once called Bitcoin a “scam” and said cryptocurrencies were a “disaster waiting to happen,” is among those who have changed their minds in recent days.
“The Democrats are very opposed to cryptocurrency, but I’m fine with it,” Trump said at an event at Mar-a-Lago in May. “If you like any form of cryptocurrency — and there are many different forms of cryptocurrency — you better vote for Trump.”
He’s since doubled down, vowing to build a “pro-crypto army” (a reference to Warren’s self-proclaimed “anti-crypto army”), slamming the Biden administration for wanting the industry’s “slow and painful death,” and announcing support for the “right to self-custody” for America’s 50 million cryptocurrency holders.
He also promised to commute the sentence of Silk Road founder Ross Ulbricht, who was sentenced to life in prison in 2015 for drug trafficking on his former website. Ulbricht's release has become a focus for some cryptocurrency supporters.
Will Crypto Voters Influence the November Election?
Recent surveys confirm that pro-cryptocurrency voters do have a chance to sway the presidential election. A Harris Poll conducted this month found that a third of voters would consider a candidate’s stance on cryptocurrencies, and 77% believe presidential candidates should have a “sensible view” on cryptocurrencies.
The research supports the findings of a March survey of registered voters nationwide by cryptocurrency company Paradigm, which found that 24% of self-identified independents had purchased cryptocurrency, including 31% of minority voters and 29% of voters aged 18-34, constituencies that traditionally lean left.
Separately, a study released in May by Harris Poll and Digital Currency Group, a prominent venture capital firm in the cryptocurrency industry, found that 26% of voters said cryptocurrency was “a major issue I’m considering” in the 2024 election. The survey included 1,201 registered voters in six swing states: Arizona, Michigan, Nevada, Ohio, Montana and Pennsylvania.
21% of registered voters say cryptocurrency is “a major issue I’m considering” in the 2024 election. (Harris Poll and Digital Currency Panel)
The numbers reveal a conundrum facing Democrats: Although Biden won four of those states in 2020, survey averages compiled by RealClearPolitics show former President Donald Trump leading in all six states ahead of the 2024 election.
And he doesn’t even need to win every state to prevail: Winning just two, Pennsylvania and Michigan, and every state he won in 2020 would tie the Electoral College at 269-269. This unprecedented scenario would result in a House of Representatives elected in November that would heavily favor Trump in choosing the next president.
Will Trump deliver on his promise to crypto voters?
If Trump stays in office for another four years, will the regulatory environment for cryptocurrencies be significantly different under Biden? Observers are divided on the answer to this question. Cuban’s fellow “Shark Tank” star Kevin O’Leary told Cointelegraph that he wants to learn more about the details of the next Trump administration.
“Tell me who’s going to be the secretary of commerce in the Trump administration,” O’Leary said. “I think you have to do a careful study and start looking at where the cabinet stands on how cryptocurrencies can be incorporated into the digital payment system and the banking system.”
O'Leary declined to comment on whether Cuban's comments spurred his Democratic allies to take action, saying with a laugh: "We don't agree on anything. That's what makes 'Shark Tank' work."
If Trump adds Pennsylvania and Michigan to the list of states he won in 2020, the result would be a tie in the electoral college. (270toWin)
Despite the electoral implications, Ryan Eagan of the Cryptocurrency Council said cryptocurrency advocacy groups would like to see the issue become less politically divisive. “It’s critical to make tech a nonpartisan issue in general,” he said.
Nickel echoed that sentiment, urging his colleagues to embrace his view. “Democrats own cryptocurrency and want to see clear regulation,” Nickel said. “This is not a Republican issue.”
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