The letter came out at a key time for two of its signers β on Friday, July 26, four days before Arizonaβs primary election.
It went to the chair of the national Democratic Party, Jaime Harrison, and Vice President Kamala Harris, and it carried a strong appeal. What the 28 Democratic signers, including two candidates for U.S. House from Arizona, wanted was for Democrats to become friendlier to the cryptocurrency industry.
βFrom an electoral standpoint, crypto and blockchain technologies have an outsized impact in ensuring victories up and down the ballot,β the signers claimed. They added, improbably: βCrypto is at the top of votersβ minds in swing states.β
Democratic candidates for Congress Yassamin Ansari, in Arizonaβs third district, and Andrei Cherny, in the first district, signed on to the dubious claim.
Four days later, one of them, Cherny, had lost his primary, and the other, Ansari, appears to have won narrowly. The margin of victory is so close β 89 votes as of this writing β that it could easily have been the $1.37 million in support by the cryptocurrency industry that pushed Ansari to victory over Raquel Teran.
This year, Big Tech and the Crypto Bros are driving for political power like never before, nationwide and in Arizona.
Thatβs been evident in the strong trend among tech billionaires like Elon Musk and Marc Andreesen to swing toward supporting Donald Trump. Theyβve led a wave of tech defections from the Democratic Party to the Republicans, motivated by a combination of ideological alignment and financial self-interest.
It was also evident in Donald Trumpβs choice of Sen. JD Vance as his vice-presidential running mate. Vance is not just a longtime supporter of cryptocurrencies who has been working to lighten regulations on them, but a creation of Silicon Valley, especially of his mentor, tech billionaire and Trump supporter Peter Thiel.
But itβs also evident in smaller scale races, like three Arizona congressional races. In addition to the Democrats Ansari and Cherny, who benefited from $415,000 in support, crypto interests also backed Blake Masters, the Tucson Republican running in Phoenix-area Congressional District 8. Masters got $583,000 in support from crypto-funded political action committees, plus additional individual contributions, but he still lost.
While the Democrats, Ansari and Cherny, spoke in the letter of cryptocurrency as a kitchen-table issue, they didnβt act that way. It wasnβt a significant part of their campaigns, nor was crypto even part of the advertising that the industry did for these candidates.
An outsized funding impact
The cryptocurrency onslaught is way out of scale to the industry, which is still a small niche within the broader financial and tech sectors.
βItβs really outsized when you look at the size of the industry,β said Molly White, an independent researcher on crypto firms and their political efforts. βSpending on Super PACs is at the same level as or even more than the healthcare industry.β
White runs a website, followthecrypto.org, that reports the spending on political campaigns by the political action committees founded by crypto interests. Together those PACs have raised more than $180 million this year, making it one of the industries spending most on political action committees.
To understand why, youβve got to understand a little bit about the hard-to-grasp phenomenon of crypto. These are digital or virtual products, the best known being Bitcoin, that can be used somewhat like currencies to transfer or store value, or as investments. The cryptocurrency is stored on a decentralized computer ledger, known as blockchain, operating independently of and shielded from governments.
Thatβs the dry explanation. The beating heart of the matter, though, is that there are millions of crypto devotees who envision it as the key to the financial future, ours and theirs. They both love the idea of a currency detached from governments and covet the profits they hope to make by investing in crypto.
Itβs been a market rife with scams and fraud, if not based on a misleading concept altogether. The excitement about crypto has been driven largely by the profits people have made from buying it, which are based largely on the excitement about crypto. Thereβs no clear good or service underlying the currencies to justify their values. It reminds me of the pyramid schemes Iβve covered.
The Biden administration has been doing something about the industryβs fraud problem. The chair of the Securities and Exchange Commission, Gary Gensler, has treated cryptocurrencies as assets to be regulated under securities law, leading to an unprecedented series of lawsuits and prosecutions, like the imprisonment of Sam Bankman-Fried. The industry hates it, and him.
βA lot of them feel like itβs an existential threat to the industry right now. They feel like the Biden administration has been extremely hostile to the industry,β White said. βTheyβve decided to try to address this by spending gargantuan amounts of money to install politicians who will take a friendlier stance to the industry.β
GOP platform backs crypto
Most of them are Republicans, who even included a crypto plank in their 2024 platform: βRepublicans will end Democratsβ 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.β
Sen. Cynthia Lummis of Wyoming has even introduced a bill that would force the U.S. government to buy 1 million Bitcoin, worth about $60 billion at Saturdayβs price, as a βstrategic reserve.β
But some are Democrats, like Ansari and Cherny. The letter they signed, essentially, calls for Gensler to be fired, by asking for a βPro-Innovation SEC Chair.β It also calls for a pro-crypto plank in the Democratic platform.
On the Republican side, the appeal is both financial and ideological. Crypto enthusiasts and Big Tech billionaires tend to share with Republicans an anti-government, anti-regulation ideology, but it is increasingly mixed, paradoxically, with an appreciation for authoritarian leaders. Silicon Valleyβs authoritarians β people like Thiel and Musk β have been mocked by opponents as βThe Nerd Reich.β
They are enthusiastically supporting Trump, who attended a Bitcoin conference July 27 and told attendees: βOn day one, I will fire Gary Gensler.β He didnβt really seem to understand what he was talking about when discussing crypto, but boosted the industry vigorously: βThe United States will be the crypto capital of the planet and the Bitcoin superpower of the world.β
He also promised to pardon and commute the sentence of Ross Ulbricht, a cause celebrated among crypto enthusiasts because he was one of the first people to put Bitcoin to practical use. He was sentenced to life in prison for drug trafficking, money laundering and other crimes, and was accused, but not convicted, of trying to hire hit men to kill people who threatened his business.
Near his conclusion, Trump said, βThank you all. Have a good time with your Bitcoin and your crypto and everything else that youβre playing with.β
Trump isnβt alone in not understanding cryptocurrency, of course. The incomprehensibility of the concept, paired with the piles of money made from it, have served to spread the belief in it far beyond the early adopters. Now all the crypto bros and tech-billionaires need is more politicians in their pockets, perhaps an autocratic president too, to help lock in their profits.
