Crypto’s Political Clout Meets Resistance On The Left

The cryptocurrency industry is becoming a political liability on the left.

A massive spending spree by crypto companies in the 2024 elections established the industry as a political force capable of making allies and breaking critics in big races. But in a series of Democratic primaries this year, progressive candidates have turned their opponents’ ties to crypto — and the industry’s campaign spending — into a successful line of attack.

The dynamic is emerging at a bad time for the industry. The Senate this week will take up a bill that represents the longtime top lobbying priority of crypto companies, and it needs bipartisan support in order to advance. Democrats considering supporting the measure must now weigh the future risk of increased blowback from their base if they bless a crypto-backed proposal. The crypto sector, though, wields a formidable war chest of campaign cash that could be deployed against Democrats if they stand in the way.

“You do not want to be in a Democratic primary as a pro-crypto candidate — no matter how much money the crypto people give you,” said Rep. Brad Sherman, a California Democrat and longtime crypto skeptic.

When Sherman, a 15-term Los Angeles-area Democrat, conducted polling on the most effective attack against a primary challenger he faced earlier this year, he said targeting contributions his opponent received from figures in the crypto world “was the single best attack.”

“I had other attacks,” he said. “That was the best.”

The shifting politics of crypto on the left poses a major dilemma for the Senate Democrats weighing whether to vote for the Clarity Act, the sweeping bill that would create a bespoke new regulatory framework for digital assets. Leading crypto companies have spent years — and hundreds of millions of dollars — lobbying for such a bill because they believe it will lock in legal certainty for their business models and help legitimize digital assets as mainstream financial products. Proponents say it will also add necessary new consumer protections in the crypto space.

About a dozen Democrats have been involved in negotiations over the bill and say they are open to supporting it. But President Donald Trump’s family business entanglements in digital assets have made the politics of the bill worse on the left, and Democrats are demanding an ethics provision restricting Trump’s ability to profit from his family’s crypto businesses. None of the Democrats negotiating on the Clarity bill face serious threats this November. But at least two — Sens. Ruben Gallego of Arizona and Cory Booker of New Jersey — are potential 2028 presidential candidates, and others could face primary challenges in the future.

Recent Democratic Senate contests in Illinois and Minnesota highlight the risk of siding with the industry. In both states, lieutenant governors defeated House members who had supported industry-backed digital asset legislation after turning their opponents’ ties to crypto into attacks.

In Minnesota, Lt. Gov. Peggy Flanagan handily defeated Rep. Angie Craig after making Craig’s ties to crypto and support for industry-friendly policies part of a broader argument that the four-term congressmember was too friendly to corporate interests. Flanagan raised the crypto issue in debates, in TV advertising and on social media.

In Illinois, Lt. Gov. Juliana Stratton overcame a roughly $10 million spending barrage from a crypto super PAC while seeking to tie the group to Trump. Though crypto wasn’t a major focus for her, she derided the spending against her as being driven by a “MAGA-backed crypto PAC.”

Crypto is far from a front-burner issue for most voters, and it’s unlikely that it was a decisive factor in either primary contest. A POLITICO poll conducted in April found that a mere 4 percent of Americans said they would weigh a candidate’s stance on crypto policy in an upcoming election, placing it at the bottom of a list of issues voters care about. Still, the attacks showed how the industry’s enormous political spending — once viewed primarily as a threat to candidates who crossed it — can provide ammunition to Democrats running against candidates it supports.

In other races, though, crypto spending has also proven to be a helpful boost for candidates. Candidates backed by the crypto industry’s leading super PAC group, Fairshake, have won in the overwhelming majority of races that it has spent in — though many were safe contests to begin with.

“Fairshake has won 50 of the 54 races we’ve engaged in this year, and we're just getting started building the largest pro-crypto Congress in history,” a spokesperson for the group, Geoff Vetter, said in a statement.

Crypto supporters say siding with the industry is an asset. They contend there is a sizable bloc of “crypto voters” who own digital assets and could be persuaded by the issue in a general election. The industry-funded group Stand With Crypto says more than 3 million people have signed up as crypto “advocates” in the U.S., while companies including Coinbase have commissioned polling that they say demonstrates the electoral importance of crypto policy.

“An infinitesimal number of Democrats are going to win being anti-crypto or anti-Clarity,” said John Anzalone, a top Democratic pollster who sits on Coinbase’s Global Advisory Council. “But they sure as hell can lose a general election being anti-Clarity or anti-crypto.”

He added that crypto has “economic populist traits” — like being an alternative to big banks and the existing financial system — that Democrats should lean into.

Stand With Crypto said in a statement that "Democrats who are on the fence about cryptocurrency should consider the needs of their constituents,” adding that voters “are fed up, and majorities feel like the system is stacked against them.”

But Jill Normington, a Democratic pollster at the firm Normington Petts who has conducted research on voter attitudes on crypto, said her data shows that voters in both parties “have strongly unfavorable opinions of the cryptocurrency industry.” (Normington declined to specify who commissioned the crypto polling.)

“Being perceived as a candidate who is backed by the cryptocurrency industry is a liability,” she said.

Sherman said Trump, who has championed the crypto sector — and made more than $1.4 billion via his family’s digital asset ventures last year — has helped taint the industry’s image among Democrats.

“Democratic voters were very skeptical of crypto before Trump embraced it,” he said. “And now that Trump has embraced it, boy do they hate it.”