Coinbase, crypto billionaires and the 2022 midterm elections

The cryptocurrency industry is constantly trying to sell us something new. This election season is the rise of the bitcoin voter, a new political constituency believed to be ready to vote for anything pro-cryptocurrency.

The Crypto Council for Innovation, a crypto-to-crypto trade group representing platforms like Fidelity and Gemini, published data last Wednesday showing that one in seven voters “own crypto and are willing to vote for pro-crypto candidates.” Coinbase, a cryptocurrency trading platform with more than 100 million users worldwide, has launched its own voter registration drive, ranking candidates based on their friendliness to cryptocurrency issues. At the same time, a small but growing number of political campaigns have begun accepting bitcoin donations to showcase their cryptocurrency.

All of this serves the notion that one day there may be a large contingent of voters supporting cryptocurrency supporters with their donations and ballots. To be clear, it’s still early days. The people behind a major campaign to mobilize crypto voters told Recode that the upcoming midterm elections are essentially a practice phase, though the ultimate goal is to develop a voting bloc that is prepared to vote in the interests of the crypto industry.

Still, it’s not clear that this strategy will necessarily work, as cryptocurrency holders are already widespread across the political spectrum. Some critics point out that the libertarian ideology behind the cryptocurrency movement does not necessarily align with the perspective of large crypto companies encouraging people to participate in the traditional political process.

“As long as someone like that exists, they’re probably someone who is deeply invested in the cryptocurrency space in one way or another,” says David Golumbia, a professor at Virginia Commonwealth University who writes about bitcoin politics. “The irony is that the whole space is saturated with anti-government sentiment and anti-democratic ideas.”

The people leading these efforts have an idea of ​​who these crypto voters might be. According to a study published by Pew in August, people under the age of 50 in the US, as well as people with higher incomes, are more likely to use cryptocurrency. Men are about 14 percent more likely to use cryptocurrency than women, and black, Hispanic, and Asian Americans are slightly more likely to use cryptocurrency than white Americans. While it’s not clear that using cryptocurrency is enough to make someone want to vote for pro-crypto causes, some strategists say enough people own crypto that the group could have some political influence. Currently, about 16 percent of US adults have used cryptocurrency at least once.

“One of the ways to accelerate policy progress on Web3 is for candidates to start polling Web3 and see how many people have it,” said Chris Lehane, a prominent Democratic political consultant who now works for Haun Ventures. was founded by former Andreessen-Horowitz partner Kathryn Haun. “You just don’t see cohorts of this stature when you get out of politics.”

Right now, cryptocurrencies don’t fall on party lines like they do on major issues like gun reform, climate change, and abortion. Republican and Democratic candidates have supported and criticized cryptocurrency, and the Congressional Blockchain Caucus, a group of lawmakers studying the technology, has members from both parties. A poll by Morning Consult late last year found that similar shares of Democrats and Republicans favor less regulation of cryptocurrency, and surveys commissioned by pro-cryptocurrency firms yielded comparable results.

Haun Ventures recently conducted a Morning Consult poll showing that likely state voters support the ideology behind Web3, an ideology that some use to refer to technologies like cryptocurrencies and blockchain, and found that New Hampshire, Nevada, and Ohio are “Web3 voters.” and Pennsylvania leaned slightly Democratic. GMI PAC, a super PAC backed by several cryptocurrency-focused venture capital and investment firms, including a hedge fund led by Trump-era minor character Anthony Scaramucci, also released a survey this month highlighting that many voters are currently actively using or might want to. using cryptocurrencies.

Stephen Diehl, a prominent critic of cryptocurrency and co-founder of the Center for Emerging Technology Policy, told Recode: “You see the industry spending tens of billions of dollars to really push regulatory agendas over the hill.” “It’s a pretty natural extension that they’re going to try to get voters.”

Even though crypto users don’t seem to be at home in any party, crypto companies are still trying to get them to vote for pro-crypto candidates. After launching a voter registration initiative last summer, Coinbase created a “legislative action portal” within its app, which is typically used to track cryptocurrency prices and trade various cryptocurrencies. This portal ranks politicians by their support for cryptocurrency using data collected on public statements, legislative documents and whether they accept cryptocurrency campaign donations. For example, Majority Leader Chuck Schumer has a negative rating, while another New York senator, Kirsten Gillibrand, has a very positive rating.

“We’re trying to build things that have an educational infrastructure that will make this interim period, longer than the 2024 election, give people the opportunity to participate not only in October and in the election year, but also in the process. [in] March of the year off,” said Miti Sathe, who heads up community engagement at Coinbase and previously worked on the Obama campaign. “We continue to be passionate about crypto issues for our community because we hear it from the community. ”

Currently, many of the politicians listed on Coinbase’s systems are unranked at all, though Sathe hopes crypto policy will soon become a significant enough voting issue for more officials to take public positions. At the same time, the app redirects Coinbase users to a website that sends a form email urging politicians to support “crypto policy.” Coinbase CEO Brian Armstrong said he said the program could eventually help politicians solicit donations and expand to elections outside the United States. After employee discussions about racial justice and the 2020 killing of George Floyd, Armstrong banned internal debate about politics and said the company would “give minimal attention to causes” unrelated to its core business.

In addition to directly appealing to voters, there is a move among some crypto-crypto politicians to accept cryptocurrency donations. There isn’t much difference between someone who sends campaign crypto and then converts it to easily spendable dollars, and someone who converts the crypto himself before donating. Still, politicians can now accept cryptocurrency through several platforms, including Coinbase, BitPay, and a service specifically aimed at politics called Engage Raise. Sixteen candidates have signed up to accept cryptocurrencies such as bitcoin, ethereum and dogecoin donations with Engage Raise, and others are soliciting cryptocurrencies directly on their campaign sites.

The results are mixed. Martin Dobelle, CEO of the company that runs Engage Raise, told Recode that they’ve received crypto donations from “probably halfway” between 10 and 100 people. BitPay CEO Bill Zielke told Recode in an email that the platform has processed “more than 500 crypto donations” this year, but wouldn’t say how many of those were specifically for political campaigns, compared to other causes. Meanwhile, Blake Masters, a Republican venture capitalist backed by Trump who is running for Senate in Arizona, raised more than half a million dollars by auctioning off 99 NFT versions of a book he co-authored with Republican donor Peter Thiel. with the opportunity to participate in social events.

Federal Election Commission data shared with Recode shows that campaigns disclosed at least 350 receipts for cryptocurrency transactions between early 2021 and the end of September this year, although that number may not include all donations made in the third quarter of 2022. Still, a single campaign can process several times more receipts in traditional currency during an election cycle, and only a handful of campaigns represented cryptocurrency receipts highlighted by the FEC’s data, including Masters, Sen. Ron Wyden, and Democratic candidate Matt West. Oregon. The FEC allows crypto donations, but has made recommendations on how to disclose cryptocurrencies.

“States are writing guidance on this, but it’s early,” Sarah Bryner, director of research and strategy at OpenSecrets, told Recode. “So I think candidates and political committees are a little wary, for good reason, of accepting or asking for that kind of money.”

Crypto’s greatest influence on politics is not expressed in bitcoin or ethereum. Everything is in US dollars – and lots of them. A number of crypto PACs have emerged with cash to support pro-crypto politicians on both sides of the aisle, including the Blockchain Association, Web3 Forward and Crypto Innovation. Many think tanks and lobbying firms have already arrived in the Beltway as politicians seek to influence emerging cryptocurrency regulations. And then there’s a new class of crypto donors: billionaire Sam Bankman-Fried, founder and CEO of crypto platform FTX, has suggested he might spend $1 billion on the 2024 election — though he’s recently backed away from that idea — and that election is among the most influential individual donors of his time.

Still, while the effort to mobilize voters in favor of cryptocurrency is only part of a broader movement to incorporate crypto into institutional politics, the people behind the effort expressed hope that crypto holders could become a real force in future elections. While cryptocurrency companies are understandably excited by the idea, others worry about what an already influential cryptocurrency voting base will ultimately mean.

“You go to someone and say, ‘Who are you voting for?’ And they say, ‘Well, which one is better for crypto?'” said Willamette University law professor Rohan Gray, who advised Rep. Rashida Tlaib on stablecoin regulation. “But being a single-issue voter around cryptocurrency is especially dangerous for democracy when a non-trivial fraction of people running for office actually don’t believe in the electoral process or are downright fascist in their goals.”

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