As regulatory scrutiny of the cryptocurrency market intensifies in Washington, cryptocurrency companies are significantly increasing their contributions to US politicians. Key players such as Nasdaq-listed exchange Coinbase, stablecoin operator Circle and a16z, the cryptocurrency investment arm of venture capital firm Andreessen Horowitz, are allocating more funds to support the election of pro-crypto lawmakers and influence bills stalled in Congress. Prominent figures in venture capital and digital assets have also joined this initiative, including Ron Conway, Fred Wilson and the Winklevoss twins.
Crypto Firms Inject $78 Million
This week, Coinbase, Circle, and a16z collectively injected $78 million into Fairshake, a federal super PAC capable of receiving unlimited contributions from companies and individuals for election expenses. The funds are intended to support candidates who advocate “pro-crypto leadership” in the lead-up to the upcoming presidential elections. Faryar Shirzad, director of policy at Coinbase, said:
“We will do whatever it takes to depoliticize cryptocurrencies. “Our lobbying, our grassroots work and now Fairshake will create space for a public debate about the merits, rather than our industry being used as a political football for demagogues who don’t understand the social benefits of technology.”
Public records reveal that Coinbase is expected to allocate approximately $4 million to lobbying efforts in the current year. Likewise, Circle, as of 2021, has spent a modest $760,000 on such initiatives. Commitment to a federal super PAC signifies a greater commitment on the part of these companies to navigate and shape the evolving regulatory landscape.
Cryptocurrency critics grow in Washington
However, the prevailing sentiment in Washington is increasingly influenced by critics of the cryptocurrency industry, including Democratic Senator Elizabeth Warren. In October, she, along with approximately 100 lawmakers, sent a letter to the White House and Treasury calling for a crackdown on illicit crypto activities.
This appeal came in response to reports indicating the involvement of digital assets in fundraising activities by militant groups in the Middle East. In a recent interview with the Financial Times, Warren said:
“Digital assets are creating a national security risk. This is not about one bad actor, it is about an entire system that allows the transfer of value without restrictions. “What attracts these criminals to cryptocurrencies is the fact that they are unregulated,” she added. “In fact, some of the crypto players aggressively advertise that they do not follow international money laundering rules by holding up a giant sign that says: ‘Launder your money here’.”