Voters who hold Bitcoin and other cryptocurrencies could have a decisive impact in the upcoming U.S. presidential election, according to the latest market commentary released this week by Galaxy Digital, a cryptocurrency financial services firm.
The report points to recent polling showing growing crypto ownership, especially among younger voters and communities of color, and argues these "crypto voters" could determine the outcome in a close race between President Biden and former president Donald Trump.
"As we inch closer to November and investors begin to narrow in on ballot implications for markets, the crypto industry may play a larger role than it ever has," the Galaxy Digital report states, citing a March poll by crypto venture capital firm Paradigm that found 19% of registered voters own cryptocurrency, including over 11 million who own more than $1,000 worth.
The Paradigm poll also found that crypto owners currently favor Trump over Biden by 48% to 39%.
Independent of crypto ownership, Paradigm's poll mirrors other national polls showing a close race, with 45% of registered voters supporting Trump and 42% backing Biden. But Paradigm's survey suggests that some 2020 Biden voters who own crypto are switching to Trump, "possibly because of actions taken by some agencies in the Biden Administration."
While not specifying which actions those might be, the crypto industry has broadly lambasted the Securities and Exchange Commission (SEC) under Chair Gary Gensler for regulating digital assets through enforcement actions rather than clear rules.
Senior Biden advisors have also called for stricter cryptocurrency regulation. By contrast, congressional Republicans have sought to pass legislation limiting federal oversight of crypto. Meanwhile, Trump has pledged to block the creation of a central bank digital currency (CBDC) if re-elected, making digital assets a key campaign issue.
Paradigm said that "it is clear that one thing these [crypto owner] groups care about is how policymakers will approach crypto," a view the Galaxy report echoes.
"The entrenched position of crypto ownership amongst Americans is further evidenced by the fact that just 32% of the voting population owns stock of any kind," the latest report observes.
Crypto-focused political action committees (PACs) are already spending big to influence key 2024 races. One leading PAC, Fairshake, has raised over $85 million from major crypto players like Coinbase and Andreessen Horowitz. It spent more than $10 million to help defeat a crypto-skeptical Democrat in a California Senate primary.
Fairshake now plans to target four critical Senate races—in Ohio, Montana, Michigan and Maryland—that could determine control of the chamber. In Ohio and Montana, Fairshake will focus on the general election, where incumbent Democratic senators have questioned the need for crypto.
The PAC has not yet announced which candidate it will back in those states.
However, Matthew Sigel, head of digital asset research at investment firm VanEck, argues that the Biden administration is hindering broader crypto adoption and that a Trump victory could boost the industry.
“The Biden Administration does not want banks and brokers to touch digital assets,” Sigel told Decrypt last month. “If the presidency changes, we're going to see a lot more support for this industry.”
The rising influence of crypto owners as an electoral force coincides with the surging popularity of Bitcoin and other digital assets. Driven by the launch of the first U.S. Bitcoin exchange-traded funds (ETFs), the largest cryptocurrency reached a record high above $73,000 last month.
"With consistent demand pressure from the newly launched spot BTC ETFs, 'digital gold' broke $70,000 for the first time in its history," the Galaxy report notes. "Bitcoin's mainstream adoption obtained further support this month on several fronts," including growing interest from major financial advisors and pension funds.
But the report cautions that the impending "halving" of Bitcoin's mining rewards next week—which in the past has served as a catalyst for even bigger gains—may not have the same effect this cycle given Bitcoin's surge to new highs ahead of the event.
Still, with the "black cloud" of the criminal case against FTX-founder Sam Bankman-Fried now in the rear-view mirror, Galaxy argues the crypto industry is poised for growth as the 2024 election approaches:
"We hope the removal of bad actors provides an uninhibited pathway for brighter days in the digital assets realm," the report concludes.
Edited by Ryan Ozawa.