This year, several crypto leaders changed how companies spend on elections in the U.S. Their actions might impact more than just the crypto world.
Lobbying efforts led by Coinbase, Ripple, and Andreessen Horowitz shifted the political scene in 2024. While they achieved success, they also set a risky standard.
Back in December 2022, after the collapse of FTX, which lost $32 billion, Coinbase’s Chief Policy Officer, Faryar Shirzad, felt cautiously optimistic. With years of experience in Washington, he saw a chance for positive change. He believed the fallout from FTX could lead to clearer regulations for trading crypto assets.
However, in the months that followed, no new regulations emerged. Instead, many politicians distanced themselves from the crypto industry, viewing it as politically dangerous. Some lawmakers used the FTX scandal to argue that crypto was inherently criminal, halting discussions on potential legislation.
By mid-2023, Shirzad and other crypto policy leaders realized the political landscape had shifted dramatically. Their lobbying efforts began to falter. They needed a fresh approach to tackle the challenges facing their industry.
This led them to create a corporate political spending strategy unlike anything seen before in American history. They anticipated it would cost around $300 million, aiming to quickly change the fortunes of the crypto industry. Experts viewed this as a way for powerful corporations to gain significant control over the political process.
In the fall of 2023, leaders from major crypto firms decided to unite, putting aside their political differences. They recognized that they needed to take bold action to protect their industry from potential extinction. They proposed forming a crypto super PAC, despite the risks involved.
Super PACs, established after a 2010 Supreme Court ruling, allow unlimited donations to support political candidates, as long as the money doesn’t go directly to the campaigns. This innovation changed the game for campaign financing, allowing groups like AIPAC to reshape congressional races with large sums of money.
Historically, corporations avoided super PACs due to their association with partisanship. But as the crypto industry faced growing regulatory scrutiny, leaders at Coinbase, Ripple, and Andreessen Horowitz recognized the need to act decisively.
Ripple’s Chief Legal Officer, Stuart Alderoty, emphasized the high costs of failing to secure favorable policies. They had already invested $150 million in defending against legal actions from the SEC.
Ultimately, these leaders decided to move forward with the super PAC initiative. They reached out to Fairshake, a newly formed crypto super PAC that lacked funding and experience but was ready to act. After evaluating Fairshake’s leadership, they agreed on key strategies, including the willingness to challenge powerful incumbents and support a bipartisan slate of candidates.
By September 2023, Coinbase CEO Brian Armstrong donated $1 million to Fairshake. Following that, Marc Andreessen and Ben Horowitz contributed $2.5 million each. Additional donations from Coinbase and Ripple increased Fairshake’s total fundraising to nearly $85 million by early 2024, breaking the previous record for corporate super PAC fundraising.
As 2024 began, the political landscape for crypto had changed. While many Democratic lawmakers opposed crypto lobbying, a grassroots campaign led by Coinbase aimed to activate the so-called “crypto voter.” They wanted to show lawmakers just how many Americans would support or oppose candidates based on their views on crypto.
However, Fairshake’s spending history tells a different story. In February, the super PAC spent over $10 million to defeat Rep. Katie Porter (D-CA). This spending was significant because Porter was not particularly anti-crypto; she was simply associated with critics of the industry.
In spring 2024, key votes on crypto regulations emerged in Congress, serving as a test for lawmakers' attitudes toward digital assets. Fairshake’s funding loomed large over Capitol Hill, influencing legislative outcomes. A significant number of Democrats broke from President Biden to support crypto-related legislation.
Democrats facing tough elections adjusted their positions in response to the new political climate. Fairshake’s financial support proved crucial for candidates like Rep. Elissa Slotkin (D-MI), who shifted her stance on crypto legislation and won her Senate race by a narrow margin.
Despite the focus on pressing issues like inflation and immigration during the election year, crypto's influence became clear. However, Fairshake’s ad purchases largely avoided direct mentions of crypto, focusing instead on broader issues like crime and infrastructure.
As the election approached, Fairshake appeared well-positioned, having endorsed a bipartisan slate of candidates. The super PAC’s efforts culminated in a remarkable victory on November 5, with candidates backed by Fairshake largely succeeding in their races. This outcome, along with Donald Trump’s re-election after his support for crypto initiatives, marked a significant turning point for the industry.
The implications of Fairshake’s strategy extend beyond crypto, raising concerns that other corporate sectors might adopt similar tactics. This could potentially undermine democratic processes. While Fairshake’s success can be credited to both strategic planning and financial investment, the broader impact on American politics remains a topic of discussion.