While some have started writing crypto off as the latest diminishing fad, there’s one area where it’s still going strong. One of the largest contributors to President Biden’s election campaign in 2020 has given an estimated $40 million in crypto to midterm election campaigns – and he’s not alone. This year, cryptocurrency money is flowing to both Republicans and Democrats as the crypto industry tries to enhance its political clout.
Midterm elections are considered a critical moment in American politics in the United States. There is already plenty of speculation about how they will turn out, as they can often determine which party controls Congress. Money inevitably plays a significant role in the outcome of these elections.
In the past, most of this money came from corporations or wealthy individuals through a political action committee (PAC). While PACs have been around for a few years, in the 2022 midterm elections, politicians are realizing that crypto investors could form a significant voting bloc in the future.
Green Light to PACs Accepting Crypto Contributions
According to a 2014 advisory opinion from the FEC, political action committees are allowed to accept contributions in Bitcoin. Furthermore, individual federal candidates can accept donations in the form of cryptocurrency.
Per the FEC Bitcoin reporting guidelines, a committee can receive bitcoins as contributions. The Act defines a “contribution” to include “any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office.”
States are also making changes to their contribution guidelines. California recently reversed a 2018 ban on the use of cryptocurrencies for campaign contributions. In July 2022, the California Fair Political Practices Commission unanimously voted to repeal the state’s cryptocurrency ban and adopt new rules for accepting crypto funds.
The Rise of Crypto Super PACs
While crypto super PACs are still relatively new, they are already starting to impact U.S. politics.
Sam Bankman-Fried, CEO of crypto exchange FTX, is the leading champion for Protect Our Future – a political action committee. As per the FEC data, the total receipts for the PAC now exceed $28M, with the lion’s share from billionaire Bankman-Fried. The PAC could potentially sway House races in Ohio and Oregon.
Another crypto PAC, the HODLPAC, has raised over $244,780 per FEC data.
Brock Pierce, the co-founder of the stablecoin Tether, has also decided to launch a super PAC. Pierce said he expects to spend $5 million or more this cycle. His spokesperson, David Weiner, said the group had lined up an additional $5 million in commitments from other donors.
The Blockchain Association has also announced the formation of a PAC, which will join the growing number of campaign-finance efforts within the crypto industry seeking to influence the U.S. government’s debate over digital assets.
Politicians Gravitating Toward Cryptocurrency
A select few members of Congress, from both Republican and Democrat parties, are championing the protection of crypto technology.
The Congressional Blockchain Caucus comprises a bipartisan group of Members of Congress and Staff. They believe in the future of blockchain technology. The Caucus has decided on a light-touch regulatory approach. It plans to be a bridge between industry and government to foster collaboration and ensure competitiveness on the global stage.
Congressman Khanna, who represents the 17th District of California, which covers communities in Silicon Valley, considers crypto “overall positive.” Khanna is a member of the House Progressive Caucus, who backed the leftwing senator Bernie Sanders for president.
The Innovation Caucus in the Senate is co-chaired by Kyrsten Sinema, a Democrat, and Cynthia Lummis, a Republican senator. The Caucus focuses on critical issues, including responsible financial innovation, distributed ledger technology (blockchain), and digital assets. Senator Lummis owns between $150,000 and $350,000 worth of bitcoin and supports the idea of investing retirement funds in cryptocurrency. Senator Lummis said, “You want some assets that are just a store of value, and I think that’s where bitcoin really shines.”
Increased Cryptocurrency Adoption
According to a Haun Ventures report, roughly 18% of voters in the four swing states of New Hampshire, Nevada, Ohio, and Pennsylvania, said they owned cryptocurrency or nonfungible tokens. Furthermore, 55% of voters surveyed would be less likely to vote for candidates who oppose policies that enable web3. And 91% of survey participants advocated for a decentralized, open internet where people have more control over their data.
The survey numbers are similar to the Economic Well-Being of U.S. Households in 2021 report by the Federal Reserve, which indicated that 12 percent of adults used or held cryptocurrency in the past 12 months. 46% of adults owning cryptocurrency for investment had an income of $100,000 or more. In comparison, 29% had an income under $50,000.
Although the number of crypto investors is lower than individuals investing in stocks or real estate, the number is steadily increasing. As per the White House, “the digital assets market has grown significantly in recent years. Millions of people globally, including 16% of adult Americans, have purchased digital assets—which reached a market capitalization of $3 trillion globally last November.”
Election Outcomes
It’s still too early to say precisely how big of an impact crypto PACs will have on U.S. politics, but there’s no doubt they are here to stay. With more and more people using cryptocurrency daily, crypto users will likely vote for candidates supporting their investments. We will see even more money flowing into political campaigns from individual digital wallets in the future.
With crypto PACs on the rise, we are bound to see serious changes in campaign spending as politicians try to align themselves to receive PAC donations. Only time will tell how exactly this new force will shape the midterm elections, but one thing is for sure – things are about to get interesting!
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This article was produced by Financial Freedom Countdown and syndicated by Wealth of Geeks.
John came from a third world country to the US with only $1,000, not knowing anyone, guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown -https://financialfreedomcountdown.com/ to help everyone think differently about their financial challenges and live their best lives. He resides in the San Francisco Bay Area, enjoying nature trails and weight training.
