California Legalizes Political Cryptocurrency Donations

Key points to remember

  • FTX cryptocurrency exchange CEO Sam Bankman-Fried donated $2 million to political groups in 2022, which is the 27th largest donation 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 has taken the Republican route 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 hands in many areas. This also extends to politics.

“You run out of really effective ways to make yourself happier spending money pretty quickly,” 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 of them were bigger than the one done to Joe Biden, with 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 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 “close to $100 million.”

California legalizes cryptocurrency donations

Many of these donations can even be made in cryptocurrency, rather than conventional fiat currency. While many states don’t have rules about the legality of donating cryptocurrency to political figures, 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 banning political donations via cryptocurrency entirely. However, during the writing of this article, California has shifted towards legalizing donations – which means the graphic below will soon have another legalized state.

FTX heavily involved in politics

Bankman-Fried is not the only donor in the cryptocurrency sector. He’s not even the only one in FTX. Looking at the donations made so far, 2022, opensecret.org took Bankman-Fried to 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 cryptocurrency’s falling prices this year, it has come a long way in the mainstream, and perhaps nothing symbolizes that more than its 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 cryptocurrency 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 cryptocurrency 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 cryptocurrency. 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 called for 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 grow. spread to the rest of the industry.

Expect more states to follow California shortly as legalizing cryptocurrency-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

https://s3.amazonaws.com/multistate.us/production/articles/abBqAY8jQcuZfeDxD/body/upload-572d89.png

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