Cryptocurrency companies poured over $134 million into the 2024 US elections, sparking concerns over their growing political influence and the potential risks to regulatory stability, according to a report by the Center for Political Accountability (CPA).
Growing Political Influence Raises Concerns
The increasing involvement of crypto firms in US politics is raising alarm among regulators, investors, and financial watchdogs. The CPA’s report, published on 7 March, described this as “unchecked political spending” that could create significant regulatory challenges.
“While the companies making these contributions may be seeking a favourable regulatory environment, these political donations further erode public trust and expose companies to legal, reputational, and business risks that cannot be ignored,” the report stated.
Fairshake Among Major Political Contributors
Fairshake, a political action committee (PAC) backed by major crypto firms such as Coinbase, Ripple, and Andreessen Horowitz, was among the biggest contributors. The PAC reportedly spent over $40 million supporting candidates who align with pro-crypto policies.
Fairshake and associated PACs were particularly active in key congressional races, aiming to influence legislation in favour of digital assets. The CPA’s report warned that as the industry seeks greater political influence through financial contributions, the risks of regulatory backlash, instability, and public distrust may intensify.
Regulatory Scrutiny and Legal Challenges
The influx of crypto money into politics has not gone unnoticed by regulators. In August 2024, consumer advocacy group Public Citizen lodged a complaint with the Federal Election Commission (FEC), alleging that Coinbase’s contributions to Fairshake and the Congressional Leadership Fund violated federal election laws due to its status as a federal contractor.
Despite these legal challenges, Coinbase has pledged an additional $25 million to Fairshake for the 2026 midterm elections. In an October 2024 blog post, the company defended its political spending, stating: “The stakes are too high for us to stand on the sidelines, and that’s why we at Coinbase are proud to help do our part.”
A Path to Regulatory Clarity?
Despite concerns over influence, some industry experts argue that political contributions are necessary for shaping a more innovation-friendly regulatory environment.
Anndy Lian, an intergovernmental blockchain expert and author, believes such spending is crucial for regulatory clarity, which, in turn, could provide market stability and boost investor confidence.
“It seems likely to boost investor confidence by reducing uncertainty, as seen in pro-crypto candidate wins boosting market sentiment, like Bitcoin’s post-election high,” Lian said.
However, Lian also cautioned that risks such as “regulatory capture,” where large firms gain excessive influence over policymaking, could undermine trust within the crypto community.
“The crypto community’s transparency and decentralisation might mitigate this, ensuring fair regulations. While controversial, I don’t find it problematic, viewing it as the industry’s maturation, though public backlash could destabilise politics if seen as buying favour,” he added.
Crypto’s Political Role Amid Scandals
The debate over crypto’s role in politics has been further fuelled by the recent collapse of the Libra (LIBRA) token, a memecoin publicly endorsed by Argentine President Javier Milei.
According to the CPA report, insiders siphoned over $107 million in a suspected “rug pull,” causing a 94% price crash within hours and wiping out $4 billion in market value. The scandal has triggered over 100 government fraud investigations in Argentina, raising concerns over the risks of political figures promoting unregulated securities.
As crypto firms continue to expand their political influence, the industry faces growing scrutiny over the balance between regulatory progress and the risks of financial and political instability.
