Crypto industry outspends defense, pharma on political donations
Crypto executives are now pouring more money into U.S. politics than many of America’s industrial stalwarts.
Political donations from the sector surged to more than $26 million during 2021 and the first three months of this year. That influx of cash is outpacing spending by internet giants, drugmakers and the defense industry — providing a fresh pool of financing for candidates heading into November’s congressional elections.
The issue of regulating virtual tokens is not nearly as divisive as gun control or abortion rights. But the upcoming election will be highly consequential for crypto: Congress may weigh in with new laws for the asset class next year, and efforts by federal agencies to study consumer protections as well as a possible Federal Reserve-backed token are coming to a head.
“The industry has been under so much scrutiny, and early next year stands to be a real inflection point in Washington,” said Eric Soufer, a political consultant with Tusk Strategies who leads the firm’s crypto and fintech practice. “It’s possible you’ll see a historic investment in this election season.”
In the 15 months that ended March 31, donations from people working in digital assets reached $26.3 million, according to Federal Election Commission data compiled by Bloomberg. That’s an enormous leap over the less than $500,000 the industry gave through the same period in the 2020 election cycle.
David Sacks is part of a small group of rich tech investors seeking to recall California Gov. Gavin Newsom.
Crypto’s giving compares with $20 million in contributions from tech giants such as Alphabet Inc.’s Google and Amazon.com Inc., $7 million from drugmakers and $18.6 million from defense contractors, according to OpenSecrets. Data compiled by the transparency group show private equity and other investment firms gave nearly $76 million over the period.
Although the roster of crypto donors is expected to mushroom as the November elections draw closer, the biggest spender thus far is Sam Bankman-Fried, the billionaire co-founder of the FTX exchange.
He contributed $16 million in April alone after being responsible for a majority of crypto’s giving through the first quarter of the year. Overall, he’s pumped in about $32 million, 75% of the industry’s total, making him the biggest individual donor other than George Soros since the start of 2021, the FEC data compiled by Bloomberg show.
The FTX chief executive has used a super political action committee known as Protect Our Future for most of his spending. Although several Democrats supported by that PAC have won primary contests, its biggest outlay of $11.4 million failed to boost Oregon Democrat Carrick Flynn, a political newcomer who ran on increasing readiness for a pandemic.
Flynn’s futility last month showed that all the spending won’t necessarily be enough to sway voters, particularly in crowded primaries focused on local issues. Soufer, the Tusk Strategies consultant, says crypto donors have a long way to go in terms of developing a cohesive strategy for getting the most out of their contributions.
“I’m not sure yet that all the political dollars are being coordinated in a truly coherent and efficient way to maximize their impact, but they still have a little bit of time to figure that out,” he said.
In a May 27 interview, Bankman-Fried said he’s undeterred by Flynn’s loss. The 30-year-old billionaire added that although it’s unlikely to reach that level, he could spend as much as $1 billion on the 2024 presidential election. Bankman-Fried said his political agenda extends well beyond crypto regulation, and his spending is now primarily focused on pandemic preparedness.
“We weren’t prepared for COVID — it cost us tens of trillions of dollars and millions of lives — and we’re still not prepared for the next pandemic,” he said.
Bankman-Fried and his trading firm Alameda Research combined to give $10.2 million to a super PAC that backed Joe Biden in the 2020 election. And the Biden Victory Fund, which raised money for his campaign and the Democratic National Committee, got a $50,000 contribution from him.
Meanwhile, donors are also seeking to boost Republican candidates. Ryan Salame, who’s also an executive at FTX, has given $5.7 million — most of it to groups that back Republicans, the FEC data show. He’s given $4 million as the only donor to American Dream Federal Action, a super PAC that’s backing GOP congressional candidates.
The surge in spending comes as calls in Washington for tighter rules on the crypto market grow louder after a popular token melted down last month, fueling a broader sell-off in the asset class. Bitcoin, the largest cryptocurrency, is down more than 50% from its all-time high in November.
“This industry has come out of nowhere to spend a significant amount of money on politics,” Dan Auble, a senior researcher at OpenSecrets, said of crypto.