A new report from the Center for Political Accountability (CPA) warns of the “profound risks” posed by cryptocurrency companies’ growing political influence. As Donald Trump pushes for deregulation and promises to establish a “crypto strategic reserve,” crypto firms have ramped up political spending, reshaping the regulatory landscape in their favour.
The CPA highlights that crypto-related political contributions surpassed $134 million during the 2024 elections. Firms like Kraken and Coinbase made $1 million donations to Trump’s inaugural fund, leading to a swift shift in regulatory priorities. Within days of taking office, Trump’s administration dropped SEC lawsuits against these companies, raising concerns about pay-to-play politics.
Trump’s Crypto-Friendly Policies
Trump’s presidency has seen a rapid dismantling of crypto regulations. SEC Chair Gary Gensler, a key figure in enforcing crypto oversight, was removed, and Caroline Crenshaw, another crypto skeptic, is set to be replaced. Meanwhile, Trump has appointed David Sacks, a crypto investor, as the new “crypto czar.”
Trump’s executive order to establish a US Crypto Reserve signals a strategic shift. He argues this move will cement America as the “Crypto Capital of the World” and counteract alleged attacks on the industry under Joe Biden. However, critics warn that these actions benefit crypto firms while exposing investors and the economy to heightened risks.
Deregulation’s Impact on Investors
The CPA report underscores the dangers of unchecked corporate influence, particularly in a volatile industry like crypto. The loosening of SEC enforcement raises concerns about fraud, lack of consumer protection, and potential financial instability.
The influence of crypto money was evident in key political races, where heavy spending targeted candidates opposed to crypto deregulation. In California, Adam Schiff, a more crypto-friendly Democrat, won over progressive crypto skeptic Katie Porter. Similarly, in Ohio, Sherrod Brown lost to pro-crypto Republican Bernie Moreno, signaling a shift in political priorities.
Argentina’s Crypto Cautionary Tale
The report draws parallels to Argentina’s recent crypto scandal, where President Javier Milei promoted a scam coin, $Libra, which collapsed, wiping out $4.6 billion in hours. Milei quickly distanced himself from the token, but over 100 fraud complaints and legal investigations followed.
The CPA warns that Trump’s crypto-friendly stance could lead to similar disasters, particularly if policymakers lack a deep understanding of the industry’s risks. Schaffzin, the report’s co-author, cautions that crypto policies driven by political motives, rather than sound financial regulation, could erode public trust and create long-term economic instability.
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