The push comes at a high-stakes moment. The sector has leaped more than tenfold in total market value since this point in the last election cycle two years ago, topping $2.1 trillion as of Wednesday. That growth has put the industry in the crosshairs of policymakers, now considering rules for digital assets that will determine how the industry evolves both in the United States and abroad. Crypto interests are racing to build influence in Washington in a bid to shape the process as it unfolds.
Industry leaders say Republican politicians, who have widely embraced crypto, will benefit from the sector’s largesse. But they are devoting special attention to Democrats, since the majority party is divided on the matter.
Democratic skeptics, led by Sen. Elizabeth Warren (D-Mass.), criticize crypto as a hype-driven house of cards that presents a growing threat to the stability of the financial system. They say it has done little besides enrich a small group of speculators, facilitate illicit activity and gobble up electricity as it demands more computing power.
But a growing number of Democrats — including liberal freshman Rep. Ritchie Torres (D-N.Y.), whose Bronx district is one of the poorest in the country — are making a progressive case for the technology, arguing that its decentralized networks could give consumers better, cheaper financial services than those offered by big banks.
The industry’s outreach is already yielding some encouragement. Schumer, for one, has not publicly spelled out a position on cryptocurrencies. But the top Senate Democrat told the insiders gathered on last week’s fundraising call that while regulations are coming, they should not smother the industry as it matures, two people familiar with the gathering said on the condition of anonymity to discuss a private event.
Schumer offered the executives some advice, telling them to present a united front and reach out to Biden administration officials as they consider rules for the sector, the people said. Spokespeople for Coinbase and Schumer declined to comment.
Top crypto donors are jumping into Democratic primaries to promote candidates they view as allies — or, in some cases, at least willing to consider the industry’s pitch. Web3 Forward, a super PAC supporting crypto-friendly Democrats, spent more than $1 million last month backing Texas state Rep. Jasmine Crockett in her successful primary bid to replace retiring Rep. Eddie Bernice Johnson (D-Tex.).
Neither Crockett nor her chief Democratic rival for the Dallas-based seat expressed views on crypto in their campaigns. And Web3 Forward did not mention it in a television ad backing Crockett that instead focused on her support for voting rights protections. Crockett did not respond to a request for comment.
“There are a lot of Democratic candidates who are pro-crypto that we want to foster in their trajectory. But any willingness to not be hostile is a good thing,” said Dan Matuszewski, co-founder of crypto investment firm CMS Holdings and a board member of GMI PAC, a super PAC affiliated with Web3Forward.
The fund — whose name is a reference to “gonna make it,” jargon that crypto natives use to express optimism in their project — plans to spend $20 million boosting crypto-friendly candidates in the midterms. Not all of it will go to Democrats, said FTX Digital Markets Co-CEO Ryan Salame, a board member of the fund who has contributed $1 million to it.
“It’s unfortunate that this has fallen on party lines, but it doesn’t need to,” he said. “We’re seeing stronger ‘anti’ voices on the Democratic side, but we’re also seeing some very positive voices, as well.”
Those opposing views are squaring off in some Democratic primaries. Rhodes, a veteran of Andrew Yang’s 2020 presidential campaign who is echoing his call for universal basic income, frames her support for crypto as a matter of economic justice. And she is featuring it in her challenge against Sherman, a senior member of the House Financial Services Committee who has called for cracking down on the technology.
“What I hear in the Black community all the time is, ‘We want ownership and to acquire wealth,’ ” Rhodes said. “I’ve met people who’ve pulled themselves out of poverty because of bitcoin.”
Surveys show that crypto owners skew young and increasingly diverse. A poll over the summer by NORC at the University of Chicago found that 44 percent of those who bought or traded cryptocurrencies in the past year were non-White, 41 percent were women and 35 percent had annual household incomes of less than $60,000. Nearly a quarter of those 18 to 29 years…
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