In anticipation of the U.S. midterm elections, the cryptocurrency industry has continued its political spending to shield itself from regulatory crackdowns with a more receptive Congress.
Many digital-asset companies and executives now support political action committees, including GMI PAC, whose top contributors include FTX Trading Ltd. Chief.
According to campaign contributions, FTX Trading Ltd. has become the third-largest source after Democratic megadonor George Soros and cardboard box manufacturer Uline. Donations also come individually from FTX CEO Sam Bankman Fried (SBF).
According to SBF, he is supporting candidates to prevent pandemics and support permissionless finance.
1) I was a significant donor in both D and R primaries.
Supporting constructive candidates across the aisle to prevent pandemics and bring a bipartisan climate to DC.
And working with them to support permissionless finance.
— SBF (@SBF_FTX) November 5, 2022
Possible Reasons for Political Donations
Increasingly, authorities scrutinize crypto issuers and lending platforms, alleging they do not comply with money laundering laws designed to protect investors. In recent years, the Securities and Exchange Commission (SEC) has brought close to 100 enforcement actions against crypto entities.
However, Pollsters predict that the Senate and House will be retaken by the Republicans, although the White House will remain democratic for at least another two years, according to a report from the Wall Street Journal.
It is possible that crypto enthusiasts will welcome Republican majorities since Republicans are often their most ardent supporters, urging lawmakers to move more bills that the industry has requested. Additionally, a Republican-controlled Congress will likely pressure agencies, like the SEC, to ease the aggressive approach they have taken against crypto companies.
Reduction in political funding
In the immediate run-up to the Nov. 8 midterm elections, Crypto executives reduced their political giving, a move following the crash of digital currencies like Bitcoin and Ether.
It is typical for donors to contribute more money to campaigns and political committees during the third quarter. However, cryptocurrency firms have given just $5 million or less each month since July, with September’s $3.9 million representing a 63% drop from June’s $10.4 million, according to a report from Bloomberg.
Source: Bloomberg: Federal Election Commission filings with data available through Oct. 19
Nevertheless, research group OpenSecrets, which tracks political donations, reports that Crypto firms and their employees invested $73 million in the 2022 elections, up from $13 million in the 2020 cycle.
Additionally, the industry spent $15 million on lobbying in the first nine months of this year, more than in the previous eight years. In this regard, the sector has outspent some drugmakers and defense contractors for much of the two-year election cycle.
As the lobbying effort continues, members of Congress from both parties introduced legislation that the crypto industry advocates for.