Most Americans have a negative view of crypto. So why are political campaigns rushing to embrace it?

The past year has not been a happy time for the cryptocurrency world.

The news surrounding the asset class has almost always been bad, filled with things like bankruptcies in crypto companies, criminal convictions and convictions of former crypto kings, and other legal setbacks.

But there is a positive point for the industry: In this election year, politicians are lining up to embrace crypto.

Many people who own cryptocurrencies… probably don’t describe themselves as crypto advocates.

Crypto critic Molly White

Some Democrats and Republicans have been long-term supporters of cryptocurrency, including Rep. Ro Khanna (D-Fremont), who last month joined 13 of his Democratic colleagues in Congress in calling on the Democratic National Committee to “take a forward-looking approach to digital assets and blockchain technology.”

In their letter to the DNC, they argued implausibly that these technologies “will have a major impact in securing victory everywhere on the ballot.”

Others are recent converts. Consider Eric Hovde of Wisconsin, who is running for the GOP nomination this year to challenge incumbent Democratic Sen. Tammy Baldwin. In 2021, when he was chairman and chief executive of Sunwest Bank, Hovde told an economics forum that the cryptocurrency market was “crazy… There’s nothing to support it… There’s nothing here.”

Hovde has since changed his stance. “I support decentralized finance and I see Bitcoin as an asset for the future and I fully support the community,” he told Politico last month. Industry lobbying organization Stand with Crypto describes him as “Very Pro-Crypto” on its website.

The industry’s biggest catch was Donald Trump. He called crypto “a scam” in a 2021 Fox News interview. “Bitcoin just looks like a scam,” he said. “I don’t like it because it’s another currency competing against the dollar.”

Read more: Op-ed: House votes to open loopholes in crypto regulation with Democrats’ approval

But he was in Nashville last month, delivering the keynote speech at the Bitcoin 2024 industry conference. He vowed to fire Securities and Exchange Commission Chairman Gary Gensler, a staunch critic of cryptocurrencies, if he is re-elected as chairman. (Trump would not have the authority to fire Gensler before his SEC term ends in June 2026.)

And Trump vowed to commute the 2015 life sentence of Ross Ulbricht, the creator of the crypto site Silk Road, who was convicted of operating what federal prosecutors called a “pervasive black market” for drugs and other illicit goods. And he promised to create a national “strategic reserve” for bitcoin, an idea that makes no coherent economic sense.

Even Kamala Harris’ campaign is treading carefully. According to the Financial Times, Harris’ aides have approached leading crypto firms to “reset” relationships with the industry. Those relationships have soured amid Gensler’s anti-crypto initiatives and a general aversion to crypto in the Biden White House.

These developments are the product of an extensive political campaign by crypto advocates. The campaign has two main elements. The first is a feature common to all special interest campaigns: Money is distributed generously to current or prospective members of Congress and those running for other positions, such as the presidency.

The other feature is the hype. Crypto advocates have relentlessly pushed the claim that 52 million adult Americans “own crypto,” a single-issue voting bloc that politicians should recognize.

The figure, which comes from a survey commissioned by crypto firm Coinbase and puts it at around 20% of the US adult population, is patently absurd. As I previously reported, it flatly contradicts a survey from the Federal Reserve System that found only 7% of adults “bought or held crypto” in 2023. That would put ownership at around 18 million adults.

Read more: Column: Sam Bankman-Fried’s seven-count guilty verdict reveals crypto is a scam from start to finish

The Fed also found that ownership has declined sharply in recent years, down from 11% of adults in 2021. In 2023, only 1% of adults used cryptocurrency to buy or pay for something (down from 2% in 2021).

This points to a fundamental truth about crypto: No one has yet identified a serious use case for it in the real world—or at least in the legitimate financial world. Crypto remains the preferred choice for criminals, including ransomware gangs.

What the crypto camp often fails to acknowledge is that, for Americans outside of this dwindling cadre of owners, crypto has a bad odor. According to a poll released in March, between 61% and 77% of voters in six key swing states (Arizona, Michigan, Montana, Ohio, Nevada, and Pennsylvania) have a negative perception of crypto.

(This was a survey commissioned by Digital Currency Group, a major crypto investor, and it skewed the findings by saying that “more than three in ten” people indicated [voters in those states] (Report positive feelings towards crypto.)

How strongly do even pro-crypto voters feel about this as a political issue? Probably not. Molly White, the indispensable and tireless chronicler of the newfangled financial technology, posits that “many people who own crypto… probably don’t identify as crypto advocates.”

“They’re more likely to be concerned about the climate, gun rights, the safety and support of transgender people, … access to abortion or maintaining access to birth control, access to school vouchers, or a host of other issues that people consider when choosing which candidates to support and oppose.”

The single-minded advocacy for cryptocurrencies actually comes from a handful of financiers who are heavily invested in cryptocurrencies for their own purposes.

There’s no doubt they have plenty of money to spend. Leading crypto campaign fund Fairshake reported donations of around $203 million as of June 30.

Fairshake spent more than $10 million last year running against Rep. Katie Porter (D-Irvine) in her race for the Democratic U.S. Senate nomination and against Rep. Jamal Bowman (D-N.Y.) in his primary race for reelection. Incidentally, both lost.

Porter has been associated with Sen. Elizabeth Warren (D-Mass.) as a vocal critic of crypto. Her primary opponent, Rep. Adam B. Schiff, took a much more tolerant tone, listing crypto among the “new advances in technology … that we need to grow” in order to keep jobs and regulatory control in the U.S. Bowman has voted against a number of anti-crypto bills in the House of Representatives.

Read more: Column: Thinking about putting crypto in your 401(k)? Think twice

Fairshake smiled at lawmakers who viewed events through crypto-tinted glasses.

Among the top prizewinners in the current election cycle is Rep. Patrick McHenry (R-N.C.). As chairman of the House Financial Services Committee, he introduced a bill known as FIT21 that would take crypto regulation out of the SEC’s hands and into the hands of the chronically underfunded and understaffed Commodity Futures Trading Commission. (The measure was not taken up by the Senate.)

McHenry’s campaign had received $126,626 from the fund as of July 31, despite announcing that he would not seek re-election this year and would retire from Congress.

Fairshake is nothing like a grassroots fundraising operation. More than $160 million of its $203 million came from six major crypto firms or investors, including Coinbase ($46.5 million), Ripple ($50 million), venture firm Andreessen Horowitz ($44 million), and the firm led by Cameron and Tyler Winklevoss ($5 million), according to Open Secrets. Marc Andreessen, his partner Ben Horowitz, and the Winklevoss twins have all publicly announced plans to donate more in support of Trump.

Crypto spending should be watched carefully in the election. Despite its supporters’ claims of its importance to financial innovation, it is not a sector that is vital to American economic development. So far, crypto has not advanced the cause of innovation other than providing drug lords and criminal gangs with a new way to conduct their business and defraud their targets.

Trump was right when he called Bitcoin a scam, and Gensler was right when he called out the “history of failures, scams, and bankruptcies” in the crypto space that have occurred “because many players are not playing by the rules.”

Like other legitimate and illegitimate businesses that invest millions of dollars in election campaigns, the crypto mob wants new rules written for their own benefit.

The victims will be ordinary Americans who have fallen victim to some form of crypto scam. While there aren’t actually 52 million crypto users in the US, that doesn’t mean the rest of us shouldn’t be protected from a new breed of financial predators.

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This story was first published in the Los Angeles Times.