Crypto Donors Jittery Over Midterm Spending After Clarity Act Failure

The U.S. crypto sector is facing a difficult political calculation as November’s midterm elections approach. After Senate Democrats blocked a major crypto bill last month, industry leaders must decide whether to retaliate at the ballot box or protect the bipartisan relationships they have spent years cultivating.

Crypto interests have poured over $300 million into recent U.S. election campaigns, distributing their support between Republicans and Democrats. The spending was designed to build political backing for legislation that would establish clearer rules for digital-asset companies.

The approach delivered a major success last year with legislation governing stablecoins, but momentum weakened after the Senate vote on the Clarity Act.

The bill was intended to establish clearer regulatory boundaries for the industry. However, Democrats, joined by several Republicans, opposed moving it forward. Disputes over President Trump’s crypto business interests became central to negotiations, with Democrats seeking stronger limits on digital-asset activities involving public officials.

The vote frustrated industry leaders and added to concerns that crypto is becoming increasingly partisan. With nine Democratic senators seeking another term, including lawmakers previously regarded as industry allies, crypto political groups are debating whether to continue supporting candidates from both parties or concentrate more heavily on Republicans, who largely backed the legislation.

Fairshake, a major crypto-focused political action committee supported by companies including Ripple and Coinbase, recently announced support for 32 bipartisan House candidates, while leaving its Senate plans unclear. The group has already participated in 57 races during the current election cycle.

The organization has previously demonstrated its willingness to target politicians viewed as hostile to cryptocurrency. In 2024, it spent roughly $40 million helping defeat Sherrod Brown (D-Ohio), a prominent critic of the sector’s political influence. This election cycle, Fairshake has allocated another $30 million toward efforts opposing Brown’s Senate return.

Additionally, the Digital Freedom Fund, supported by entrepreneurs Tyler and Cameron Winklevoss, plans to spend about $3 million against Brown while backing Sen. Jon Husted (R), who supported the Clarity Act.

Industry figures caution against turning every disagreement into an electoral battle. Democratic senators Cory Booker and Mark Warner remain influential figures with whom crypto companies have maintained ties. Both opposed the Clarity Act while supporting broader crypto legislation, citing concerns about restrictions on officials’ digital-asset dealings.

If Democrats regain Senate control, they could also gain greater authority to investigate crypto businesses connected to Trump. Brown’s possible return could be particularly significant because he could potentially reclaim a leadership role on the Senate Banking Committee.

Despite the tensions, some industry participants expect crypto groups to remain focused on supporting candidates who favor clearer regulation, regardless of party affiliation.

Stand With Crypto, a Coinbase-backed nonprofit, has similarly endorsed candidates across party lines. Its recent selections have largely favored lawmakers who supported the Clarity Act, suggesting the industry may ultimately choose political pragmatism over broad retaliation.

The coming elections have raised the stakes for crypto regulation, and enterprises like Riot Blockchain Inc. (NASDAQ: RIOT) will be closely following how the battle for key Congressional seats pans out.

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