A newly released analysis highlights significant concerns about the rising influence of cryptocurrency companies in United States politics, coinciding with Donald Trump’s moves towards reduced regulation and his pledge to establish a “crypto strategic reserve.”
The report, published by the Center for Political Accountability (CPA), a non-profit organization advocating for transparency in corporate political engagement, asserts that this situation “exemplifies the serious hazards posed by unrestricted corporate financial involvement in politics, specifically within the often-turbulent cryptocurrency sector.”
The report further elaborates, stating that, “The aggressive pursuit of deregulation, coupled with unclear and unaccountable financial contributions to political campaigns, has not only alarmed regulatory bodies but also undermined investor confidence and public faith in the long-term sustainability of these businesses.”
According to the CPA, cryptocurrency, often referred to as “crypto,” is defined as “a financial technology that emerged in the early years of the 2010s… intended to bypass conventional central authorities, such as banks, by enabling decentralized, peer-to-peer transactions registered within intensely secured digital ledgers.”
The analysis points out that “certain publicly traded enterprises engaged in these areas have commenced considerable political spending at both the state and federal levels – totaling over $134 million during the 2024 election cycle alone.”
Following the election, the CPA highlights that crypto companies such as Kraken and Coinbase were among “a selection of… public companies contributing $1 million each to the Trump Inaugural Fund.” With Trump now in office, the Securities and Exchange Commission (SEC) has dismissed lawsuits against both Kraken, previously accused of functioning as an “unregistered securities exchange,” and Coinbase.
These actions transpired after the departure of Gary Gensler on Inauguration Day, January 20th. Gensler, confirmed as SEC chair under Joe Biden, was openly targeted for removal by Trump. Caroline Crenshaw, a commissioner confirmed during Trump’s first term, but who, similarly to Gensler, was opposed by factions within the crypto industry, was scheduled to serve a second four-year term but will now be replaced.
Bruce Freed, president of the CPA, remarked, “Crypto money wielded significant influence in the election. Consider the candidates who were unsuccessful in areas where substantial crypto funding was present.”
He continued, “Take, for instance, the case of [progressive representative and crypto skeptic] Katie Porter in the California [US Senate] primary. Adam Schiff [perceived as more crypto-friendly] benefited from this dynamic. Substantial crypto funds were deployed against Sherrod Brown [a Democratic incumbent, defeated in Ohio by crypto-supporting Republican Bernie Moreno], given his role as chair of the Senate Banking Committee [and a noted crypto skeptic].”
“Moreover, examine the SEC,” Freed added, “and the oversight and regulation of crypto. Certain enforcement actions initiated under Gary Gensler against crypto entities have now been withdrawn. The considerable impact of crypto money within a short timeframe is readily apparent.”
Ben Schaffzin, CPA assistant director of research and the report’s lead author, stated that crypto companies “overwhelmingly surpassed every other industry in terms of outside spending” in 2024. “We’ve never witnessed anything quite like it before… and now we are seeing the Trump administration rapidly moving forward with their concept of a ‘crypto strategic reserve’,” Schaffzin explained.
This month, Trump, who has introduced his own crypto ventures, posted on his social media platform that utilizing taxpayer funds to create “a US Crypto Reserve” would “elevate this critical industry after years of corrupt attacks by the Biden administration,” furthering his drive to “ensure the US becomes the Crypto Capital of the World.”
On Thursday, Trump signed an executive order to establish this reserve. On Friday, he convened a White House “cryptocurrency summit,” followed by a reception hosted by Coinbase.
Schaffzin, along with Jeanne Hanna, CPA’s vice-president of research and fellow report author, emphasized Trump’s designation of David Sacks, a South African entrepreneur and crypto investor, as “crypto czar.”
The authors note that Sacks “has reportedly divested his personal crypto holdings,” however, “it remains uncertain if he will also divest from his investment firm, where he remains a partner, and which potentially stands to benefit from the specific cryptocurrencies mentioned in the executive order if they are acquired in large quantities by the U.S. government.”
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“These potential conflicts of interest do little to ease concerns regarding the ‘pay-to-play’ aspects of cryptocurrency,” a CPA author noted.
When asked whether the outlook on crypto would have been less alarming had Kamala Harris won the presidency, Hanna responded: “This spending exhibited incredible bipartisan reach… [however] as with much that has transpired within the past six weeks [since Trump assumed office], the pace of developments within the crypto industry has arguably been accelerated by certain executive appointments made by Trump in this arena. Nevertheless, I suspect the overarching regulatory landscape under Congress may not have differed dramatically under Harris as compared to Trump.”
Freed commented: “With Trump, you observe a far more transactional approach to politics and policy-making, which I believe is particularly significant concerning [crypto]. The immense financial resources deployed, for example, against Sherrod Brown, demonstrate crypto’s fundamental desire to operate free from any oversight or regulation.”
“There was clearly a profound interest in the proceedings at the SEC… Crypto definitively sought to avoid any encumbrances from oversight or regulation,” Freed emphasized.
To exemplify the hazards of crypto’s influence within politics, the CPA report cites recent events in Argentina, where Javier Milei – another right-wing populist president akin to Trump – endorsed “a fraudulent cryptocurrency called $Libra that rapidly lost its entire value, roughly $4.6 billion, in just a matter of hours.”
“Although President Milei promptly retracted his endorsement of the token afterward, his political opposition has since filed over 100 fraud complaints with the government, prompting a judge to initiate an investigation,” amidst calls for Milei’s impeachment.
“This scandal has only further accentuated the systemic risks inherent within the crypto space,” the CPA authors conclude.
Schaffzin argued that Argentina should serve as a cautionary tale for the Trump administration, adding: “Publicly promoting this material from a position of executive authority, when the person may lack a full understanding of the mechanisms of crypto and the risks it poses to average consumers unaware of its pitfalls, is exceptionally perilous.”