Crypto industry election spending faces setback as Democrats secure key wins

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Crypto election spending setback

Highlights

Crypto industry political action committees spend over $60 million in Ohio targeting Democrat Sherrod Brown, who still wins his Senate race, signaling limited sector influence.
Fairshake-backed candidates win 29 out of 34 House and Senate races after over $13.5 million spent in Nebraska and support for 32 House candidates, though several races remain uncalled.
Despite crypto-backed candidates gaining ground and Bitcoin rising 3.1% above $80,000, Democratic control of Congress and the Clarity Act's defeat increase prospects for tighter regulation and scrutiny.

Election bets test crypto lobbying strategy

As reported by Reuters, the biggest setback for the industry comes in Ohio, where Democrat and crypto skeptic Sherrod Brown wins his Senate race despite more than $60 million in spending by crypto political action committees aimed at defeating him. The contest ranks among the most expensive Senate races in history and is widely seen as a test of the sector's political influence.

The result follows a difficult stretch for the industry after the Senate in September votes against advancing the Clarity Act, a major crypto bill opposed by Democrats. Some progressive Democratic primary candidates also successfully attack rivals over their crypto ties, adding to concerns in Washington about the sector's political standing.

Jaret Seiberg, an analyst at TD Cowen, says in a Tuesday note that the outcome is souring the political environment for crypto. While the industry still wins most of the races it targets, lobbyists are now questioning whether the money is going to the right candidates and contests.

Congress shift clouds outlook for regulation

Fairshake, the leading industry super PAC backed by Coinbase, Ripple and Andreessen Horowitz, still records a notable win in Nebraska after spending at least $13.5 million to help defeat independent Senate candidate Dan Osborn. Osborn loses to Republican Senator Pete Ricketts, who supports the Clarity Act.

Fairshake also puts its financial support behind 32 House candidates, including 19 Republicans and 13 Democrats that it views as aligned with industry priorities. So far, it wins 29 of the 34 races where it spends, with several contests still uncalled, while three of the six House candidates receiving at least $1 million in backing are victorious.

Over the past two election cycles, the crypto industry spends roughly half a billion dollars to build a bipartisan coalition in Congress. That effort helps elect dozens of crypto-friendly lawmakers in 2024, paving the way for legislation supporting dollar-backed stablecoins, but the Clarity Act's defeat and Democratic control of Congress now expose the sector to tighter oversight and possible investigations, especially around its ties to President Donald Trump.

Cryptocurrency prices post overnight losses after the election results, but recover on Wednesday. Bitcoin is last up 3.1% above $80,000, while executives such as Ripple chief legal officer Stu Alderoty argue the long-term direction remains favorable even as they acknowledge the risk of Democratic scrutiny.

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