The 2024 elections are once again hinging on narrow margins nationwide with hot issues like immigration, the economy, abortion, and foreign policy getting most attention. But many of the contests, including the presidency, may ultimately be decided on other issues motivating different constituencies that can hold the balance.
One that is starting to gain more credible momentum is an unexpected entrant – the increasingly enthusiastic crypto constituency in the United States.
It isn’t a fringe industry anymore and it’s not new to politics. But crypto is getting more robust and organized in this cycle than ever before and notching serious legal and policy victories on the way. In contrast, the Biden administration, and a small group of Democratic allies in Congress, have chosen to savage crypto with no clear rhyme or reason, with the Securities and Exchange Commission (SEC) and Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) taking the lead. They are starting to look increasingly isolated from a constituency that a recent survey found makes up as much as 40% of the American public.
Leadership at crypto firms tired of endless SEC lawsuits and lack of a regulatory framework are deciding to fight back. A turning point was the legal victory of California-based Ripple Labs against the SEC in one such lawsuit. The company, which sells cross border payment systems to global banks, was sued by the Commission for its sales of the XRP cryptocurrency that it uses in its software product. The SEC alleged all sales of XRP were unregistered securities in the company and added CEO Brad Garlinghouse as a co-defendant.
In July 2023, Judge Analisa Torres of the Southern District of New York ruled that the XRP token is not a security when traded on public exchanges, a first of its kind ruling for cryptocurrencies. Ripple had to spend over $100 million on legal costs to achieve that victory.
Notching that win had Garlinghouse emerge as a spiritual leader for many in crypto’s foray into hardball politics. His defiance paved the way for other companies to fight back and win. At an event for thousands of jubilant retail XRP holders to celebrate the legal victory in New York, Garlinghouse took the stage to proclaim: “It does take a village to fight a bully, and this village beat the bully!”
Ripple is now parlaying that energy into political muscle. As the 2024 elections began to take shape, Garlinghouse tweeted that Ripple would be “leading the charge” to support “pro-innovation and pro-crypto candidates” in the upcoming cycle. Ripple has joined with other notable names in the crypto industry, such as Coinbase, Andreessen Horowitz (a16z) and the Winklevoss twins in pledging support to Fairshake, a federal super PAC committed to promoting leaders who “champion innovation” and manage the intricacies of “responsible regulation in the digital age.”
Fairshake and two affiliated super PACs have built a war chest of over $110 million—in large part due to Ripple’s massive donations. On May 29th, the company announced its second $25 million contribution to the super PAC. Garlinghouse said that Ripple would continue to donate to the effort in coming years, noting, “This is not a one-time thing for us.”
So far, it seems Fairshake has been successful. It was credited with thwarting U.S. Representative Katie Porter’s (D-CA) bid for Senate. Porter was an ally of Senator Warren and quickly singled out as a test case for crypto’s political muscle in Silicon Valley. It was wildly successful.
Warren faces her own challengers this cycle, namely John Deaton, a former marine, trial attorney, and hero within the crypto community whose legal filings on behalf of retail investors in the Ripple v. SEC case contributed to his meteoric rise. Fairshake and Garlinghouse have invested heavily in Deaton’s campaign and superstar billionaire Mark Cuban endorsed him. The race is an outlier among Senate contests to watch, but it represents the breadth of targets they can hit.
Just recently, major cryptocurrency legislation passed the House. With 71 Democrats including former House Speaker Nancy Pelosi joining Republicans in voting in the affirmative, the bill sets the stage for regulatory clarity in the industry. It still needs to pass the Senate, where Brown and Warren will stand in its way. Fairshake is aggressively spending against Brown in Ohio and other vulnerable Senate Democrats, and the party leaders seem to be waking up to the costs of keeping up the fight against crypto.
Garlinghouse and the rest of the industry’s leaders, most of them Californians, were probably up for grabs politically before the Biden Administration launched its barrage of lawsuits against them. Now they are pouring tens of millions of dollars into the 2024 campaign season and intend to change the political game board. The results will speak for themselves, but if they commit these kinds of resources in every election season there is little doubt they will upend the map.
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