Cryptocurrency companies have emerged as major players in American politics, significantly increasing their political spending. A report by the Center for Political Accountability (CPA) highlights how crypto firms spent over $134 million in the 2024 election, shaping outcomes at both national and state levels.
Following Donald Trump’s victory, crypto giants Kraken and Coinbase donated $1 million each to his inaugural fund. This influence became evident when the Securities and Exchange Commission (SEC) dropped lawsuits against both companies after Trump took office. The move signaled a retreat from regulatory oversight, raising concerns about unchecked corporate influence in politics.
Trump’s Crypto-Friendly Agenda
Trump’s administration has acted swiftly to reshape the crypto landscape. In a bid to make the US the “Crypto Capital of the World”, Trump signed an executive order to create a US Crypto Reserve and appointed crypto investor David Sacks as the country’s “crypto czar”.
This policy shift aligns with Trump’s promise to deregulate the industry, overturning enforcement actions taken under former SEC Chair Gary Gensler. With key regulatory figures replaced, crypto companies now face fewer restrictions, giving them more freedom to operate with minimal oversight.
The Dangers of Deregulation
The CPA warns that the aggressive push for deregulation, combined with opaque political contributions, poses serious risks. The absence of strong regulatory frameworks could erode investor confidence and expose consumers to potential fraud.
A similar situation unfolded in Argentina, where President Javier Milei promoted a scam token, $Libra, which collapsed, wiping out $4.6 billion. The scandal led to over 100 fraud complaints and a judicial investigation. Experts fear that the US could face similar risks if crypto regulation continues to weaken.
A ‘Pay-to-Play’ Crypto Economy?
The influence of crypto money in politics extends beyond policy changes. Reports show that candidates opposing crypto regulation faced heavy political spending against them, impacting elections.
- In California, crypto-backed spending helped Adam Schiff defeat progressive candidate Katie Porter.
- In Ohio, Sherrod Brown, a crypto skeptic and chair of the Senate Banking Committee, lost his re-election bid to crypto-friendly Republican Bernie Moreno.
With such deep political ties, concerns grow over a “pay-to-play” system, where crypto companies dictate policies in exchange for financial support.
The Future of Crypto Regulation
While the crypto industry celebrates its newfound political power, experts warn of long-term consequences. The lack of oversight could lead to market instability, fraud, and consumer losses, similar to past financial crises. The CPA urges greater transparency in corporate political spending to prevent unchecked influence from derailing regulatory efforts.
