There hasn't been a bull market at all since then. In the intervening years, cryptocurrencies experienced a spectacular crash that embarrassed many celebrities who were paid to promote cryptocurrencies. Although its value has recovered since the crypto winter of 2022, it has not yet reached the level of the peak market capitalization in 2021. As of the last presidential election, supporters were at least able to sell the idea that cryptocurrencies represented the future of American technology and the cutting edge of Silicon Valley innovation. Today, artificial intelligence clearly occupies that space in its place, and blockchain is similar to yesterday's news, if not more so than SPACs, NFTs, and the Metaverse, but it's a throwback to the free money, zero interest rate era. It is a relic that was left behind. High-profile scams and scandals have become so widespread that making jokes and podcasts about them isn't all that fun anymore. The most famous figure in this sector remains Sam Bankman Freed, the disgraced FTX founder who currently shares prison space with Diddy.
So what happened? What explains the sudden political salience of cryptocurrencies and the bipartisan pandering that results from them? Trump's three sons and Kamala Harris' surrogate Mark Cuban can tell this story from a personal perspective, supporting their respective candidates. There are still a few true believers who imagine use cases for blockchain beyond speculative trading, and lobbyists are talking about the rise of crypto advocates. But while perhaps 15 percent of Americans own some amount of Bitcoin, there is little indication that many of them are voting on vague issues of regulatory policy. (A recent poll of young men, who are often said to be the natural targets and voters of such appeals, ranked cryptocurrencies last in importance out of 27 political issues. )
Occam's razor explanation for what happened is simply money in the form of campaign contributions being funneled from crypto businesses into politics at essentially unprecedented speed and scale. Almost half of all corporate donations this election cycle have come from crypto companies, up from less than 5% in 2020 (in the midterm elections two years ago, the share was even smaller, around 3%). In 2020 and 2022 combined, crypto companies spent nearly $10 million on federal elections, according to Public Citizen. The campaign spent nearly 12 times more, to $119 million.
This is a staggering amount of spending, enough money for one election cycle to make crypto companies the second-largest contributor to general election spending in 14 years since Citizens United. Only the fossil fuel industry has increased spending since 2010, and as Charles Duhigg reported in The New Yorker this month, recent spending increases have already helped California Rep. Katie Porter's Senate race. There is a possibility that he will claim responsibility for his first defeat. It had a chilling effect on officials of both parties. Because the federal government has not yet resolved what regulatory approach it should take towards cryptocurrencies, the stakes in the debate are very high, in fact even higher than most regulatory issues regarding adjustments to the status quo. And as a result of cryptocurrency lobbying and donations, today politicians on both sides of the aisle are likely to pay at least lip service to an industry that has long promoted itself as the vanguard of financial separatism. , the token itself is a kind of gateway drug to a stateless liberal future. There, investors operate beyond the reach of the law, and eventually the rest of society will follow suit.
This all amounts to an incredible lobbying success story. It is also “a symptom of systemic corruption” and “evidence that American governance and laws are so distorted by money that it is nearly impossible for people other than billionaires to advance their own ends.” ”, Duhigg wrote.
