Crypto’s 2024 Corporate Election Spending Dwarfs All Other Sectors
Regulatory clarity within the United States is one of the cryptocurrency industry’s top goals.
The sector isn’t scared of spending big to get closer to it, a Wednesday (Aug. 21) report showed. Forty-eight percent of all corporate money contributed to date during the 2024 election cycle, about $248 million, has come from crypto firms.
This makes the industry the most dominant corporate political spender, per the report. The crypto political action committee (PAC) Fairshake and its affiliates have compiled a war chest from Web3 corporates, including Coinbase and Ripple, that sits at nearly $114 million, dwarfing the $26 million raised by second-place Koch Industries-backed Americans for Prosperity Action PAC.
The campaign spending comes against an industry backdrop where cryptocurrencies have evolved from a niche interest to a financial force, with a market capitalization that reached the trillions of dollars at its peak. However, this rapid growth has been accompanied by a patchwork of regulations that vary widely from country to country, and even within jurisdictions. The lack of uniformity has led to uncertainty, stifling innovation and deterring both investors and companies from fully committing to the crypto space.
It also comes on the heels of news Thursday (Aug. 22) that former FTX executive Ryan Salame — who pleaded guilty to campaign finance violations in 2023 and was sentenced to 7.5 years in prison — is asking a judge to enforce his plea deal, claiming that the government is not holding up its end of the bargain.
Read also: Crypto’s Three Priorities for 2024: Interoperability, Acceptance, Regulation
Crypto Companies Dominate Corporate Election Spending
The blockchain technology market is worth an estimated $19.7 billion. In the next eight years, that valuation could skyrocket to $943 billion.
However, the absence of clear regulations has created an environment where crypto businesses must navigate a maze of often contradictory rules. In the U.S., for example, different regulatory bodies such as the Securities and Exchange Commission, the Commodity Futures Trading Commission and the IRS have each taken different stances on how to classify and regulate cryptocurrencies. Is bitcoin a currency, a commodity or a security? The answer varies depending on which agency you ask.
The regulatory ambiguity forces companies to spend resources on legal advice and compliance, often at the expense of innovation. Startups, which are typically more agile and less financially robust than established companies, are particularly hard-hit. For many, the cost and risk associated with potential regulatory violations are too great, leading them to either pivot away from crypto-related activities or relocate to more crypto-friendly jurisdictions.
The strategic shift in political contributions from traditional sectors to crypto signifies a broader change in corporate America’s approach to election spending. The pivot reflects the crypto industry’s urgency in influencing policy directions amid an increasing desire for clarity around the regulatory decisions that could impact the future of digital currencies and blockchain technology in the United States.
“It’s important to know that crypto is not just bitcoin and Doge and NFTs,” Solana Foundation Head of Payments Sheraz Shere told PYMNTS in May. “… Blockchains are really alternative rails for payments and financial assets.”
See also: Fed Action Against Customers Bank Underscores Crypto’s Challenges
Achieving Regulatory Clarity
While the benefits of regulatory clarity for crypto are clear, achieving it is challenging. The rapid pace of innovation in the crypto sector means that regulators are often playing catch-up, trying to apply existing frameworks to new and evolving technologies. This can lead to regulations that are either too restrictive, stifling innovation, or too lenient, failing to provide adequate protection for consumers and investors.
Unlike traditional financial institutions, which are typically centralized and easy to regulate, many crypto projects operate on decentralized networks with no central authority. This makes it difficult for regulators to identify who is responsible for ensuring compliance and enforcing rules.
Crypto still needs to shake its association with the finance that tends toward the illicit. As recently as Wednesday, a group of hackers took over the McDonald’s Instagram account and used the fast-food giant’s account to promote a fake cryptocurrency that it dubbed “GRIMACE,” pocketing $700,000 from the scam.
Still, according to PYMNTS Intelligence, blockchain technology, the technical infrastructure enabling crypto, has potential for use in regulated industries, such as finance and healthcare.
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