Cryptocurrency
Crypto's 2024 Election Impact: Propelling Allies to Victory in Washington
2024-12-09
Fresh off the heels of crypto's remarkable success in the 2024 election and witnessing the soaring value of cryptocurrencies like Bitcoin and XRP, Brad Garlinghouse, the CEO of Ripple, has made a significant move. His company has already contributed a substantial $25 million towards an industry super PAC, with an eye firmly set on the 2026 midterm elections. This move has sparked a flurry of discussions and analyses within the crypto and political arenas.
Unraveling Crypto's Role in Elections and Regulation
Section 1: Crypto's Success in 2024 and Ripple's Contribution
In the 2024 election, crypto achieved remarkable success, with the value of major cryptocurrencies skyrocketing. Brad Garlinghouse, at the helm of Ripple, recognized the significance of this moment and took proactive steps. His company's contribution of $25 million to the industry super PAC is a clear indication of their belief in the potential impact of crypto in the political landscape. This move not only showcases Ripple's financial strength but also highlights their commitment to shaping the future of the industry.Crypto companies made a substantial third of all direct corporate contributions to super PACs during this election. Of the 29 Republicans and 33 Democrats they supported, an astonishing 85% emerged victorious. Garlinghouse views this as a major victory, emphasizing the growing influence of crypto in political affairs.Section 2: The SEC's Approach and Ripple's Response
The Securities and Exchange Commission's approach to the crypto industry played a crucial role in shaping events. SEC Chair Gary Gensler led the federal government's crackdown on crypto, filing more than 120 lawsuits against crypto companies. In 2020, the SEC sued Ripple, alleging that its sale of XRP represented the sale of an unregistered security. Garlinghouse has been fighting this lawsuit in court, arguing that XRP should not be subject to the agency's registration and disclosure requirements.This legal battle has had a significant impact on Ripple and the crypto industry as a whole. Garlinghouse believes that without Gensler's actions, Fairshake, the industry super PAC, might not have come into existence. In response, an SEC spokesperson emphasized the importance of investor protection and the need for proper regulation.Section 3: Crypto's Transparency and Risks
John Reed Stark, the former chief of internet enforcement at the SEC, has a different perspective. He believes that crypto lacks sufficient transparency and is a potential source of various crimes, including ransomware, human sex trafficking, and money laundering. The collapse of Sam Bankman-Fried's FTX exchange in 2022 serves as a case study, highlighting the need for proper oversight.However, Garlinghouse argues that there are good actors in crypto. His company employs 900 people and is working with regulated financial institutions to create a faster and cheaper way for people to send money overseas using XRP. XRP is now traded on exchanges, providing opportunities for investors to make a profit.Section 4: Crypto's Involvement in Elections
In the last election, the cryptocurrency business spent a significant amount of money and had a visible impact. Ripple contributed $48 million to political action committees that supported pro-crypto Republicans and Democrats. In the Ohio Senate race, Republican Bernie Moreno received $40 million in positive ads from a crypto-funded super PAC, which ultimately helped him defeat the incumbent Democratic Sen. Sherrod Brown.Garlinghouse believes that crypto-backed super PACs educated voters and played a crucial role in determining who should govern in Washington. He argues that all citizens should want representatives who are open to using technologies to benefit them.Section 5: Crypto under the Trump Administration
President-elect Donald Trump, who embraced crypto during his campaign, intends to nominate Paul Atkins to chair the SEC. Atkins, a former SEC commissioner with consulting ties to crypto companies, is expected to take a different approach from Gensler.Former SEC official John Reed Stark believes that voters have given Trump a mandate to govern in a way that is more favorable to crypto. Trump's Cabinet picks, including Scott Bessent for Treasury secretary, have also expressed positive views on crypto.In September, Trump announced his involvement in a new cryptocurrency platform called World Liberty Financial and the launch of its digital coin. When asked about a potential conflict of interest, Garlinghouse emphasized the will of the voters.Section 6: Regulatory Changes and the Future
Garlinghouse believes that putting money to work in the election was a strategic move to get rules written. Existing laws do not fit well with cryptocurrencies, and Congress needs to adopt new legislation governing digital assets.FIT21, a Republican bill with bipartisan support, passed in the House. This bill aims to create a new regulatory framework for digital assets, giving more responsibility to the Commodity Futures Trading Commission (CFTC). The SEC and CFTC have different mandates, with the SEC focusing on investor protection and the CFTC on marketplace integrity.Lawmakers from both parties agree that something must be done to plug regulatory gaps and prevent confusion in the crypto market. While it's not clear whether the bill will be reintroduced in the new Congress, there is a growing consensus on the need for regulatory reform.