Crypto is emerging as an electoral issue. Some say it’s typical 'pay-to-play Washington politics.'

There’s no question that crypto is talked about in the political arena, but opinions vary on why the topic rose to prominence and how it would impact electoral outcomes.

The fact that cryptocurrency made it into the 2024 Republican platform is “a pretty big deal,” according to Sheila Warren, CEO of the Crypto Council for Innovation, a trade group advocating for cryptocurrency.

However, “the reality is this election is just not about crypto or digital assets,” Warren said. "There’s no question it is an issue … but it is not the issue of this election,” she added.

Warren’s view differs from crypto firms and advocates who insist that voters will base their decision on whether or not a presidential candidate is “pro-crypto,” and the Republican Party seems to be listening.

In its 2024 platform, the GOP pledges that “Republicans will end Democrats’ unlawful and unAmerican crypto crackdown and oppose the creation of a Central Bank Digital Currency. We will defend the right to mine bitcoin, and ensure every American has the right to self-custody of their digital assets, and transact free from government surveillance and control.”

Ripple representatives attended the Republican National Convention, and the company plans to attend the Democratic National Convention as well, with the goal of “education,” and to “spread the messaging of where our smart policies are intersecting with greater kind of American policies,” said Lauren Belive, head of U.S. policy at Ripple, a cryptocurrency firm. Coinbase, another crypto firm, also sent representatives to the RNC, according to reporting from Politico.

Belive contended that this year's election cycle is a "pivotal" one for the cryptocurrency industry at large.

However, some contend that the crypto industry merely bought its way into the conversation.

“The only reason people are talking about crypto, currently, so much is because of the amount of money they are spending to buy politicians to push their special interest above every other priority of the American people,” said Dennis M. Kelleher, co-founder, president and CEO of Better Markets, a nonprofit that describes itself as a Wall Street and government watchdog.

According to OpenSecrets, both Coinbase and Ripple are ranked in the top 10 of organizations making the most contributions — including those to candidates, party committees, PACs, 527 organizations and outside groups — in the 2024 election cycle. OpenSecrets tracks contributions “from the organization's employees and members, its PAC and the organization itself, only when it gives to outside groups,” according to its website.

“Despite the industry's rhetoric around this, the shift in position from policymakers in Congress and other parts of Washington is not based on the substance of the industry's policy arguments,” said Mark Hays, senior policy analyst at Americans for Financial Reform, a nonprofit advocating for financial reform, and Demand Progress, a nonprofit progressive advocacy group.

“The industry likes to say that this is true proof that there's a so-called crypto voter, that crypto is a major election outcome or a major election issue. But I just feel like it's sort of the same old pay-to-play Washington politics,” Hays added.

In May, the House passed a comprehensive crypto bill known as the Financial Innovation and Technology for the 21st Century Act, or FIT 21, with bipartisan support. Though the bill is unlikely to pass the Senate this year, sources said its passage still marks an important milestone.

The bill would give new oversight of the digital commodities market to the Commodity Futures Trading Commission, while also designating the Securities and Exchange Commission as the regulator for the digital securities market. It also directs both agencies to propose joint rule-makings on digital assets and allows digital asset intermediaries to dually register with the SEC and CFTC.

Many in the crypto industry have said legislation is needed to achieve regulatory clarity, which has historically kept institutional investors away from the asset class.

However, there have been unexpected changes in the crypto world recently, as the SEC in May approved eight applications to list and trade shares of spot ether exchange-traded products, following a January approval of 11 applications for spot bitcoin ETFs.

Also in May, both the House and Senate passed a congressional resolution with bipartisan support to overturn SEC guidance on the custody of digital assets. The guidance will survive, however, as the House failed to override the president’s veto of the resolution.

The SEC guidance requires any custodian of digital assets to report those assets on their balance sheets, thereby raising capital requirements, which some GOP lawmakers said hinders banks from acting as custodians for digital assets.

In a plea to get more Democrats on board, Rep. Patrick McHenry, R-N.C., who chairs the House Financial Services Committee, suggested that voting to override the veto could help them in the upcoming election.

“If … you want to send the message to your voters that you're pro-crypto and you want to protect their assets … (you) should vote with us,” McHenry said on the House floor July 10.

Both Hays and Kelleher chalked up Congress’ recent crypto moves to the influence that money has on the legislative agenda.

In May, Ripple made a $25 million donation to the crypto super PAC Fairshake, which focuses on House and Senate races, according to Ripple’s Belive. This followed a $20 million donation in December, putting the company right behind Coinbase as the top donor for the super PAC, according to data from OpenSecrets. Belive said the company is committed to supporting candidates that are “pro-innovation, pro-crypto regardless of their party positions.”

According to Hays, crypto firms’ donations are “the same old sort of special interest money distorting policy outcomes.”

“We're concerned that's going to harm investors because it will likely lead to the passage of legislation that creates more permissive regulatory oversight for an industry that really hasn't demonstrated a good body of practice and could actually amplify risk for investors,” Hays added.

In addition to including crypto in the 2024 Republican platform, the campaign for former President Donald Trump has acknowledged the industry in several ways.

In May, the Trump campaign established a fundraising page accepting donations in the form of cryptocurrency. On July 27, Trump spoke at Bitcoin 2024, a Nashville-based conference that also featured independent presidential candidate Robert F. Kennedy Jr.

J.D. Vance, the Ohio senator recently announced as Trump’s running mate, has been working on his own legislation to revamp digital asset regulation, according to reporting from Politico, and Belive called him a “very pro-crypto lawmaker.”

According to Belive, these are all signals that Trump is a consumer of crypto, wants to regulate it and wants to put forth smart policy on it if he wins.

When asked why Trump’s campaign has embraced the issue, CCI’s Warren responded, “I think there are a couple of people who put a ton of effort into getting into his ear on the topic," which she said is "of crucial importance to the American economy."

“I also think that there's something about the ethos and culture of crypto that is appealing to someone like Donald Trump,” Warren added. “There’s kind of an upstart rebellious culture to it, and I think that is familiar to someone who I think sees himself … as somebody who's a bit of a rebellious upstart in the political arena.”

In addition, Warren said, "there is a bro culture in crypto, that I personally find very problematic,'' which she said aligns with the tone and rhetoric of the Trump campaign.

“The Republicans are gaining support by saying they’re pro-crypto,” and the Democrats could gain support if they follow suit, according to Belive, who contended “there is an opening” for the new Democratic nominee to appeal to the industry.

Vice President Kamala Harris received President Joe Biden’s endorsement after he dropped out of the race and is expected to be the Democratic nominee.

“Kamala Harris, I do not believe, has a strong position on crypto and has not been seen as kind of like the architect of the anti-crypto agenda,” Warren said.

Harris is a native Californian, and the industry is thriving in the state, so there’s a sense that “she understands California, she understands the Valley, she understands tech,” Warren added.

While “there’s some optimism there,” it will be up to the Harris campaign to form a position on crypto, she said.

To Warren, “crypto should not be a partisan issue. The extent to which it's been politicized is a problem; it is not good.”

Belive seemed to have a similar view, noting that “the worst case scenario is that this industry is seen as a political football.”

“This should not be a wedge issue,” Warren added. “It should be something that any candidate of any party in any race, however down ballot, however top of the ticket, should understand.”