| When Sam Bankman-Fried’s cryptocurrency empire collapsed in 2022, it left a beleaguered digital asset industry without a leading ambassador to Washington. Over the two years since one company has positioned itself above the rest in trying to fill the void: Coinbase. The largest U.S. crypto exchange, founded in 2012, has ramped up its political influence operation to become one of Washington's top spending — and most controversial — players. Its efforts have helped allow the niche digital asset sector to play an outsized role in the 2024 elections. But the scale and overt nature of the influence campaign have also sparked tension within the industry, as some worry that it could backfire in the long term. “They tie their name to everything,” one crypto lobbyist, granted anonymity to discuss sensitive intra-industry dynamics, told MM. “It’s just Coinbase, Coinbase, Coinbase.” The company has spent more than any other business in the crypto sector on lobbying, pumped more than any other firm into the industry’s top super PAC, launched a standalone group aimed at mobilizing grassroots support for its cause and run an aggressive public relations campaign. Together it's made Coinbase synonymous with the industry’s brute force tactics to get its way from Washington. “Engagement in the political process is a priority for Coinbase, and I think something that’s very important for the crypto industry as a whole,” said Paul Grewal, a former federal magistrate judge who serves as Coinbase’s chief legal officer. Coinbase first began spending money on lobbying about a decade ago, but its D.C. efforts have exploded recently. Over the last two years alone, it has spent well over $50 million on influence operations, according to federal campaign finance records and lobbying disclosures compiled by the watchdog group OpenSecrets. The $1.8 million it has poured into lobbying this year ranks sixth among all securities and investment groups, according to OpenSecrets data — and first among crypto firms. In addition to its in-house lobbying team, which includes several former Capitol Hill staffers, it has had more than a half-dozen outside firms lobbying on its behalf. In August 2023, it also helped set up an independent group, Stand with Crypto, which is seeking to mobilize grassroots crypto enthusiasts to lobby Congress and support industry-friendly candidates. The firm’s biggest — and most controversial — political play has been backing a $160 million industry super PAC network that is spending money around the country to boost crypto allies and defeat potential critics. Coinbase has put $49 million into the super PACs — more than any other company — and is seen as a catalyst of the effort, though two other firms, Ripple and Andreessen Horowitz, have also put in similarly large sums. The political campaign has received personal support from the company’s billionaire CEO and founder, Brian Armstrong, who has appeared at Stand with Crypto events and personally donated to the super PACs. Armstrong, a former Airbnb software developer, isn’t the typical prototype of a Washington industry representative — much less one who is helping lead a campaign that has shaken up American politics. He had little political involvement before he became a leading advocate on crypto policy. One person who has worked closely with Armstrong described him as being apolitical but said he holds a libertarian worldview. The person added that Armstrong has “actually enjoyed” engaging with elected officials on both sides of the aisle. The source said Armstrong ramped up the work in the wake of Bankman-Fried’s downfall, as he felt the industry was being painted unfairly. The aggressive approach on all fronts has generated friction, including within the industry. Critics say the lobbying and super PAC efforts are distorting the debate over crypto policy. “Coinbase, like any special interest — using vast and seemingly unlimited amounts of money to buy politicians and the political system to promote their interests over everything else — is a perversion and corruption of the campaign and political systems,” said Dennis Kelleher, the CEO of the financial watchdog group Better Markets and a top crypto critic. Coinbase officials say their lobbying and campaign activities have been in response to a regulatory crackdown brought by the SEC under Chair Gary Gensler, who was appointed by President Joe Biden. “The Luddites in our government and those who are anti-crypto — by nature, by orientation — may characterize this as big business flooding the political sphere with money and other resources,” Grewal said. “But that’s how our political process works, for good or for bad.” While Armstrong and Coinbase have broadly earned praise across the crypto sector, some lobbyists worry that the overt nature of the influence campaign has given fuel to critics of digital assets and could backfire in the long run. “The amount of money is obscene,” the crypto lobbyist granted anonymity said. The person added that the industry “would be better served by keeping its head down a little bit.” Coinbase representatives say the company has always worked collaboratively within the industry. Kara Calvert, Coinbase’s head of U.S. policy, told MM that its lobbying and influence efforts are “principles-focused, mission first and bipartisan.” “The approach has been very reflective of some of the core principles just of the crypto industry as a whole,” she said. “We are going to be transparent about who we support and who we don’t. It’s based on their positions on crypto, and we focus on that issue solely.” IT’S FRIDAY — We’re just six editions of MM away from Election Day. How are you feeling? Let me know at jgoodman@politico.com. And find Sam at ssutton@politico.com.
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