‘Everyone’s mad’: Inside crypto’s civil war over the US elections

The cryptocurrency industry is exerting more sway than ever over U.S. politics.

But behind the scenes, cracks are emerging between its left and right flanks over how to influence who will be president and control Congress next year.

Democratic crypto lobbyists, executives and investors say the industry is at risk of leaning too far right as its leaders come out in force for GOP presidential nominee Donald Trump, who is promising policies that would boost digital asset firms. Their Republican counterparts say engaging with Democratic nominee Kamala Harris and backing her party’s down-ballot candidates risks isolating long-time allies in the GOP, with little to no guarantee it will pay off. The Biden administration has taken a skeptical approach to crypto trading, and it’s unclear what Harris would do.

The internal dispute has spilled into view as the industry’s nearly $170 million super PAC effort begins to spend on key races across the country and some crypto advocates seek inroads with Harris. Democratic megadonor Ron Conway abandoned the crypto super PAC network, known as Fairshake, after it announced it would spend millions to unseat Sen. Sherrod Brown in Ohio. GOP lawmakers, including NRSC Chair Steve Daines of Montana, expressed frustration to crypto executives when Fairshake decided to back Democratic Reps. Ruben Gallego of Arizona and Elissa Slotkin of Michigan for Senate races in their battleground states, said a person briefed on the talks who was granted anonymity to discuss private conversations.

“There’s a tremendous amount of emotion right now,” Blockchain Association CEO Kristin Smith said. “There’s an industry strategy, and then there’s somebody’s individual strategy — and those are sometimes maybe not fully aligned.”

Nearly a dozen crypto advocates familiar with the conflict said in interviews that the rising tension is creating new hurdles for the industry as it tries to advance a regulatory overhaul on Capitol Hill, which was already a long shot thanks to election-year politics and limited floor time.

“Since the [Ohio super PAC] announcement, it’s been a mess,” said one congressional aide granted anonymity to speak candidly. “Democrats are mad, Republicans are mad, everyone’s mad.”

It’s not unusual for election-year dynamics to impede bipartisan momentum. But it is notable for an industry itself to be so divided over how to proceed. Even top executives at failed crypto giant FTX contributed huge sums to both parties.

“You have about the same number of Republicans as Democrats as independents,” said a crypto lobbyist granted anonymity to speak candidly. “That’s just a unique industry, and it’s causing conflict.”

Crypto’s biggest political campaign funders are becoming increasingly outspoken about their personal perspectives.

Andreessen Horowitz co-founder Marc Andreessen, whose venture capital firm is a major crypto backer, recently declared Trump “the right choice” for “the future of our business.” Cameron and Tyler Winklevoss, co-founders of the digital asset firm Gemini, said they would donate $1 million each to Trump.

“The vitriol coming from right-of-center, from very prominent CEOs and investors, has caused a lot of consternation on the left,” said Jonathan Padilla, a crypto entrepreneur who helped launch Crypto4Harris in a bid to rally support for the vice president.

The tensions are spreading to Capitol Hill, potentially jeopardizing a surge in bipartisan support this year for legislation that would establish crypto-friendly regulations.

Since 71 House Democrats helped 208 Republicans pass a crypto overhaul in May, the issue has taken on a more partisan tinge.

Weeks before he became Trump’s running mate, Sen. JD Vance of Ohio began circulating a crypto regulation proposal that’s unlikely to get traction across the aisle. Senate Agriculture Chair Debbie Stabenow (D-Mich.) scrapped a committee vote on her own crypto bill after she couldn’t get GOP buy-in.

Some crypto advocates are now floating the idea that the industry should curb its push for further votes until Trump is elected and Republicans gain seats in the Senate. Though top Democrats like Majority Leader Chuck Schumer have shown openness to the crypto world’s concerns, the idea is that Republicans will be more reliable allies.

“If you think Donald Trump is going to win the election, and particularly if you think the Senate is likely to be under Republican control, why negotiate against yourself?” said a crypto lobbyist granted anonymity to discuss the thinking.

Democratic crypto lobbyists and lawmakers warn that it’s short-sighted to go all-in on the GOP. They’re working to make inroads with the Harris campaign and remain hopeful that she’d pursue more supportive policies than has Biden, whose regulators have had fierce clashes with digital asset firms.

“Crypto advocates who are also reaching out to Harris don’t believe in putting all the eggs in one basket or in one party,” Crypto Council for Innovation CEO Sheila Warren said. “And I think that is seen as being courageous, or pointless, which is a sad state of affairs, but that’s where we are.”

The concern about burning bridges on the left escalated after the crypto super PAC network announced plans to spend $12 million to support Brown’s Republican opponent Bernie Moreno in Ohio’s U.S. Senate race. Brown, if re-elected, would likely chair the Senate Banking Committee next year and have a major say over the future of crypto regulation, making the move a risky bet.

“Anyone who cares about the future of crypto should want this issue to stay in the bipartisan lane,” said Rep. Wiley Nickel, a North Carolina Democrat who is trying to connect the Harris campaign with crypto industry players. “Anything less would poison the well for a decade.”

Pro-crypto Republicans say it’s naive to hold out hope for Democrats. The party is home to some of the industry’s biggest foes, including Securities and Exchange Commission Chair Gary Gensler and Sen. Elizabeth Warren of Massachusetts, who warn that crypto trading poses perils to consumers and the financial system. Harris has no clear record on the issue.

“I am very concerned that many candidates are changing their tune on the subject for political gains,” said Sen. Cynthia Lummis, a Wyoming Republican who’s a prominent crypto booster. She says she’s “very skeptical of Harris’ alleged change of heart.”

Fairshake, the crypto super PAC network, has spent large sums on Republicans and Democrats, as it works to secure allies and derail critics. But that doesn’t mean either party is happy. The group, which said it has spent about $75 million of the $169 million it’s raised, declined to comment for this story.

Some Democratic donors, including the tech billionaire Conway, have warned that the network’s spending is more broadly geared toward winning GOP majorities in Congress.

Republicans are likewise growing annoyed by the super PACs’ support for Democrats, and some see it as a betrayal after years of support. Among them is Daines, the Montana lawmaker leading the GOP’s effort to win back the Senate.

“You’re pissing off the people who have promoted the industry, for a political party that has been skeptical at best,” said a GOP strategist granted anonymity to share private discussions. “There’s been conversations [among Republican lawmakers] about, Do you think twice before having a meeting with people in the crypto industry?”

Declan Harty and Jasper Goodman contributed to this report.