WASHINGTON (AP) — Erin Houchin braced herself for the worst when a mysterious group began buying television ads last month in her highly competitive race for Congress in southern Indiana.
Houchin assumed she would face negative blitz, like the one that crushed her in 2016 when she ran for the same seat. But, in fact, the opposite happened.
American Dream Federal Action, a super political action committee funded by a cryptocurrency CEO, saturated the district with ads promoting Houchin as a “Trump Tough” conservative who would “stop socialists in Washington.” That momentum helped secure his victory last week in a Republican primary.
“All you can do is hold your breath,” Cam Savage, a longtime Houchin consultant, said of learning about the ad buy. “I could help you, but the fear is that it will end you.”
The impact of unsolicited aid shows how crypto tycoons are emerging as the new players in political power. They are pouring millions of dollars into the primaries in their attempt to gain influence over members of Congress and other government officials who are crafting regulations.
This year, for the first time, industry executives have spent nearly $20 million so far, according to records and interviews.
It’s a delicate but deliberate march by companies that make money based in part on evading government attention.
More than $100 million has also been spent on lobbying since 2018 by crypto firms, as well as those who could potentially lose out if the industry goes mainstream, records show.
The push comes as the Biden administration and Congress consider new regulations and set funding levels for agencies that will oversee cryptocurrencies.
“What do they want? They don’t want regulation, or they want to help write regulation. What else is new?” asked Sen. Sherrod Brown, D-Ohio, an industry critic.
Cryptocurrencies are a digital asset that can be traded over the Internet without relying on the global banking system. They have been promoted as a way for those with limited means to build wealth by investing in the next big thing.
But they are also highly speculative and often lack transparency, substantially increasing risk. On Thursday, cryptocurrencies including Bitcoin and Ethereum fell in value.
Jan Santiago, deputy director of Global Anti-Scam, an organization that helps victims of cryptocurrency fraud, said the industry has been reluctant to police the bad guys.
“Unless it affects their bottom line or their public reputation, I don’t think there’s any financial incentive for them,” he said.
There are signs that cryptocurrencies are going mainstream. Fidelity Investments, one of the largest providers of retirement accounts in the country, announced earlier this month that it will begin allowing investors to put Bitcoin into their 401(k) accounts.
And there are signs that the government is increasing scrutiny.
The Securities and Exchange Commission unveiled a plan last week that would nearly double the size of its staff focused on cryptocurrency oversight. Days later, the Justice Department indicted the CEO of a cryptocurrency platform and mining operation, alleging that he orchestrated a “$62 million global investment fraud scheme.”
Meanwhile, members of Congress and the administration have raised concerns that Russian oligarchs may turn to cryptocurrencies to evade US sanctions imposed when Russia invaded Ukraine.
But at least one lawmaker has been an active participant in promoting the lure of crypto riches.
Rep. Madison Cawthorn, a conservative Republican from North Carolina, touted a new crypto currency in a video posted on social media, emphatically declaring, “This is going to the moon, baby,” while urging viewers to check out the website. of the coin and “get on the train.” But after an initial spike, its value plummeted and it is now worth a tiny fraction of a penny.
Cryptocurrency advocates in Congress acknowledge the problems but argue that the roughly $2 trillion industry has matured.
“I am confident that bitcoin protects consumers,” said Sen. Cynthia Lummis, a Republican from Wyoming, who has invested in the currency. “I am not sure that all cryptocurrencies protect consumers. In fact, I’m willing to bet that most of them are fraudulent.”
Many cryptocurrency advocates vehemently opposed the regulation. But lobbyists say it is now a settled debate and their goal is to convince skeptics not to get too heavy a regulatory hand.
Perianne Boring, founder of the Digital Chamber of Commerce, advocates developing accounting standards for the industry to help crypto businesses become publicly traded companies.
“Because there are no standards, many companies are hesitant to touch cryptocurrency,” said Boring, whose group has spent nearly $2 million lobbying the federal government.
Some lobbyists are hoping a wave of campaign spending could help, much of it directed at the Democratic primary.
“People in crypto are suddenly happy to go to political fundraisers,” said Kristin Smith, executive director of the Blockchain Association. Smith, whose group has spent about $4 million on lobbying since 2018. He added: “The government could come in and really mess it up if we don’t engage constructively.”
That has fueled a sense of resentment among some Democrats. In suburban Atlanta, Democratic Representatives Carolyn Bourdeaux and Lucy McBath are clashing after their districts were merged during redistricting. A cryptocurrency-affiliated super PAC is backing McBath, paying $2 million in TV advertising praising her.
“They are not doing this out of the goodness of their hearts. They’re doing this because they want something,” Bourdeaux said.
A spokesperson for the group Protect Our Future said the charges have nothing to do with regulating cryptocurrencies.
Crypto super PACs are also active in other prominent races, including the Democratic Pennsylvania Senate primary, where $212,000 was spent last week on ads endorsing John Fetterman, the state’s Democratic lieutenant governor. The ads say that Fetterman “will not be fooled by lobbyists or politicians.”
But overall, the spending is of such a magnitude that it has raised questions about the industry’s motives.
“It tells all Democrats that if they have a primary, they could win $2 million,” said Rep. Brad Sherman, D-Calif., chairman of the House Financial Services subcommittee that oversees investor protection. point.”