The crypto industry plowed tens of millions into the election. Now, it’s looking for a return on that investment

By Fredreka Schouten, CNN

(CNN) — The cryptocurrency industry’s leading super PACs plowed $131 million into congressional races this election cycle to help elect dozens of pro-crypto lawmakers, while individual billionaires with crypto interests spent millions to help return Donald Trump to the White House.

Now, they are determined to change how Washington treats their business.

Goals include ensuring Trump selects a crypto-friendly Securities and Exchange Commission chair to replace Gary Gensler, whose aggressive enforcement actions during the Biden administration enraged cryptocurrency CEOs. Industry groups are also lobbying Congress to pass a regulatory framework that they say is needed to pull crypto into the mainstream of the US financial system.

The industry could be well-positioned heading into the new session of Congress. A tracker run by a group called Stand with Crypto said 274 pro-crypto candidates had been elected to the House and 20 to the Senate this cycle. Crypto super PACs spent heavily on Republicans as well as key Democrats, including two who won open seats in the US Senate, Elissa Slotkin in Michigan and Ruben Gallego in Arizona.

Crypto’s bipartisan political clout signals a remarkable rebound from just two years ago when the industry was reeling from the sudden implosion of the troubled FTX crypto exchange. In its aftermath, lawmakers scrambled to rid themselves of campaign donations from the firm’s leader, Sam Bankman-Fried, who is now serving a 25-year prison term for defrauding customers and investors.

Bitcoin, the world’s largest cryptocurrency, climbed to record highs after Trump’s win, in anticipation of more pro-crypto policies from his administration.

How Washington regulates the industry has enormous consequences for this burgeoning sector, along with the 52 million Americans who now hold digital assets.

“Crypto is a political force,” Kristin Smith, chief executive of the 98-member Blockchain Association told CNN. “As a result of this past election, we’ll have the most pro-crypto Congress that has ever been elected but also the most pro-crypto administration that’s ever been in power.”

Smith said the industry is communicating with Trump’s transition team “through various channels” to make its views known on personnel picks and other policy preferences.

“The strategy is to have as many conversations with as many people in the Trump orbit as possible so that everyone has an understanding of what the crypto industry is most interested in,” she said.

Currently, Smith said, the industry’s leading choices for SEC chair include former SEC commissioner Dan Gallagher, now the chief legal officer at Robinhood, which has an arm that allows users to buy and sell crypto on its platform.

Paul Atkins, also a former commissioner of the SEC, who now runs a financial services consulting firm, is also seen as a top contender. Atkins serves on the advisory board of the Token Alliance, which promotes the use of digital assets. Neither Gallagher nor Atkins responded to inquiries from CNN.

Smith said the blockchain group also hopes to advance other changes, including potentially establishing a White House czar who can help orchestrate cryptocurrency policy across government agencies.

Crypto conversion

Trump and several key allies working on the transition have a decidedly pro-crypto bent. The former president, who, as recently as 2021, appeared to dismiss Bitcoin as seeming “like a scam” has become a convert. He’s since had a licensing deal to sell NFTs or non-fungible tokens.

During an appearance at a Bitcoin conference over the summer, Trump made big promises – pledging to oust SEC chair Gensler and to make the US “the crypto capital of the planet.” (Gensler’s term runs until 2026, but it is customary for SEC chiefs to resign when a new administration takes over.)

Trump also has promised to create a national cryptocurrency reserve.

Trump and his sons have also launched their own cryptocurrency business, World Liberty Financial. It’s not clear how the president-elect intends to navigate potential conflicts of interest with this and other parts of his business empire – given his role in selecting the federal officials who will police the industry.

His conversion, in part, appears to have been driven by interest from his sons. During a livestream touting World Liberty Financial, Trump described his 18-year-old son, Barron, as a crypto fan.

Steve Witkoff, a close Trump friend and real-estate developer, also said he was involved in the venture.

Trump transition officials did not respond to CNN inquiries.

Other Trump allies also are bullish on digital assets, including multibillionaire Elon Musk – who plowed nearly $119 million into electing Trump and has been tapped to help lead a new Department of Government Efficiency whose abbreviation, DOGE, offers a play on Dogecoin, a cryptocurrency promoted by the mogul.

Howard Lutnick, who serves as co-chair of the presidential transition, oversees investment bank Cantor Fitzgerald with a client roster that includes the digital currency company Tether.

Super PACs supporting Trump’s bid also drew donations from leading industry figures. Venture capital honchos Marc Andreessen and Ben Horowitz – whose firm has invested in crypto startups – each donated $2.5 million over the summer to Right for America, a super PAC led by Trump ally Sergio Gor that promoted Trump’s candidacy in swing states.

In a recent podcast, Andreessen celebrated the election outcome, saying it “felt like a boot off the throat.”

Both investors have been critical of the Biden administration’s regulatory posture, which they argued stifled US innovation. They also helped finance Fairshake, a crypto industry super PAC launched last year that was active in congressional contests.

Other industry donors backing Trump include Tyler and Cameron Winklevoss, twin brother crypto tycoons who each donated $250,000 to a pro-Trump super PAC overseen by Musk and about $1 million apiece in Bitcoin to a Trump joint fundraising committee.

Spending blitz

Much of the activity to influence congressional races in this cycle stemmed from three crypto industry-funded PACs: Fairshake and two affiliated super PACs, Defend American Jobs and Protect Progress, that ran ads to boost their favored candidates.

While their money made a difference, it’s not clear that the pro-crypto agenda persuaded voters — most of their ads did not even mention crypto, but instead promoted other issues such as candidates’ personal histories.

The industry’s political influence became apparent earlier this year following its roughly $10 million spending spree against Democratic Rep. Katie Porter, a close ally of Massachusetts Sen. Elizabeth Warren, a prominent critic of the industry. Porter lost her Senate primary in California to fellow Democrat Adam Schiff.

An industry super PAC spent $40 million to back to Republican Senate candidate Bernie Moreno in Ohio, who ousted three-term Democratic Sen. Sherrod Brown.
Brown, who chairs the powerful Senate Banking Committee, had called for more regulation of the sector. Moreno, a former luxury car dealer, founded a blockchain company and has been a vocal advocate of the technology.

Among the changes that could be revisited in the incoming Congress is legislation to shift some federal oversight of the industry from the SEC to the Commodities Futures Trading Commission, which some critics argue could reduce oversight.

The House, by a large bipartisan margin, in May approved making the CFTC the primary regulator of digital assets. Although the measure did not win Senate approval, industry insiders insist that the broad support in the House and the sector’s increased campaign spending helped convey to candidates, including those seeking the presidency, that crypto had emerged as a political force.

Industry groups insist they are not seeking to evade regulation but want more clarity as their business booms.

“In order to build, you need to know what the rules are governing what you are building,” said Colin McLaren, engagement director of the Cedar Innovation Foundation, a crypto-aligned nonprofit.

Consumer groups, who fret that the legislative proposals sought by the industry could result in inadequate consumer protections, say this year’s political spending blitz set off alarms about the newfound clout of a single sector.

“What the election showed was that the industry is willing to make massive spends to bend politicians in favor of an insecure product that has demonstrated no meaningful economic purpose,” Robert Weissman, co-president of the left-leaning group Public Citizen, said in a statement.

The industry is signaling that it intends to become an enduring presence in Washington.

Officials with Fairshake say they have already amassed – along with affiliated super PACs – $78 million for the 2026 midterm congressional elections, still two years away. That includes $30 million in political cash left over from this year’s contests, plus early financial commitments from the Andreessen Horowitz firm and Coinbase, one of the industry’s largest trading platforms.

Kara Calvert, the head of US policy at Coinbase, said the sector wants to lock in continued support for its agenda. “We have to invest year after year, and we have to make sure that Congress understands the criticality of this industry,” she said.

CNN’s David Wright contributed to this report.

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