California Legalizes Political Cryptocurrency Donations, as Crypto Companies Increase Political Spending
Key points to remember
- FTX crypto exchange CEO Sam Bankman-Fried donated $2 million to political groups in 2022, which is the 27th most on record. So far, he has donated more than $21 million in total to Democratic candidates and PACs.
- Two other FTX executives, Ryan Salame and Nishad Singh, donated an additional $1 million each
- Bankman-Fried was also among Joe Biden’s top backers in the 2020 presidential campaign, while his spending in the 2024 election could reach $1 billion.
- Salame, however, has taken a Republican line with his funding, but there doesn’t appear to be a strict party line taken by either.
- Oregon, Michigan, and North Carolina have all banned crypto-denominated donations, but more states have legalized it or are considering introducing a framework to do so — California just announced a U-turn on its previous ban
Introduction
FTX has its hands in a lot of pots. This also extends to politics.
“You pretty quickly run out of really effective ways to make yourself happier spending money,” FTX CEO Sam Bankman-Fried has said in the past. “I don’t want a yacht.”
Bankman-Freid may not want fancy toys, but he does want to influence the world, and part of that has manifested in a number of political donations. None is more important than Joe Biden, the current president receiving $5.2 million from Bankman-Fried in the 2020 presidential race.
In total, he has so far donated more than $21 million of his money to various Democratic and Democratic-aligned PAC candidates.
As for the 2024 elections? Bankman-Fried says he could spend up to $1 billion depending on the candidates (not the party), with the floor likely “north of $100 million.”
6) At the end of the day, I care about politics, not politics, and I don’t think either party has a monopoly on good ideas.
My contributions may or may not be substantial; and their distribution will depend on the candidates and the policies.
— SBF (@SBF_FTX) May 25, 2022
California legalizes crypto donations
Many of these donations can even be made in crypto, rather than conventional fiat currency. While many states don’t have rules about the legality of donating to political figures in crypto, several states have already fully legalized it, including Washington, Arizona, Colorado, Illinois, Ohio, and Georgia.
The map below shows, however, that a few states have gone the other way, with California, Oregon, Michigan, and North Carolina outright banning political donations via cryptocurrency. However, as this article is being written, California has flipped to legalize donations – which means the graphic below will soon have another state legalized.
FTX heavily involved in politics
Bankman-Fried is not the only donor within crypto. He’s not even the only one in FTX. Looking at the donations so far in 2022, opensecret.org have Bankman-Fried at 27th with $2 million in funding. However, two other FTX executives – Ryan Salame and Nishad Singh – donated an additional $1 million each, 44th overall.
Despite the drop in crypto prices this year, she has come a long way in the mainstream, and perhaps nothing symbolizes that more than her growing involvement in politics. The combination of these three FTX donors alone would place the exchange 14th among political donors this year.
Interestingly, Salame’s funding appears to be led by Republicans, contributing funds to the American Dream Federal Action in May, which contrasts with the pro-Democratic stance of fellow FTX Bankman- Fried. Even Bankman-Fried has made smaller donations in the past to Conservative candidates, so apparently it’s not strictly party-focused, as he claimed above.
Indeed, the divide between Democrats and Republicans in crypto is fascinating, with the latter seeming to be more industry-encompassing, as Democrats worry about money laundering, environmental damage, and investor exploitation.
Similar to previous elections
While cryptocurrency was orders of magnitude lower in previous presidential campaigns, the growth in the use of crypto as a donation vehicle is reminiscent of past elections.
Donald Trump harnessed the power of social media – especially Twitter – in his shock victory in 2016, while Obama used smartphone technology with enthusiasm four years before. These new methods of introducing technology into campaigns can be a good way to win over voters, especially the younger generation, or those who might otherwise be less inclined to vote.
polarizing
Cryptocurrency remains a hugely polarizing issue, with opponents claiming it is a hype-fueled fad and nothing more than a get-rich-quick scheme, while proponents claim the technology blockchain can make the world better, fairer and more equitable.
It is therefore not surprising that he is starting to tie himself more and more to crypto. We’ve seen some politicians – the president of El Salvador, the mayor of Miami, the mayor of New York, to name a few – enthusiastically embrace the technology, while others have demanded that it be brought under control – China has outright banned it, for example.
As the industry continues to grow, despite the recent price drop, cryptocurrency regulations and the attitude of politicians towards the industry will become increasingly important, especially if political donations from FTX start to rise. spread to the rest of the industry.
Expect more states to follow California shortly, however, as legalizing crypto-denominated donations is an easy win for lawmakers — it doesn’t delve into the more complex regulatory issues surrounding the industry. , while nonetheless encouraging crypto-native people to donate.
Sources
https://www.opensecrets.org/outsidespending/summ.php?disp=D
https://decrypt.co/47292/one-of-joe-bidens-biggest-donors-runs-a-cryptocurrency-exchange
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