Democrats in crypto talks are working against the campaign-season clock

Democratic senators trying to reach bipartisan agreement on major cryptocurrency legislation are also working against time as the industry prepares to flood the midterm elections with cash.

If discussions in the Senate don’t result in progress within the next month or so, digital assets super PACs will likely start spending big money against lawmakers who stand in the way of a deal the industry is seeking.

The cryptocurrency super PAC network known as Fairshake, which played a key role in the 2024 cycle, has already raised at least $141 million to spend in the medium term. This cycle also saw the formation of two new crypto super PACs, Digital Freedom Fund and Fellowship, which are expected to spend at least $21 million and $100 million, respectively.

The timing is particularly difficult for Senate Democrats, as their party is more divided on whether to give the crypto industry its top priority: setting rules for exchanges, brokers and issuers.

While a few of them work on a potential path forward, people close to the negotiations described an unspoken tension between getting to “yes” — thereby gaining potential support for future campaigns — and being seen by the Democratic base as either giving in to the industry or failing to hold President Donald Trump, a proud crypto ally, accountable.

“Democrats considering running in 2028 are balancing support for industry and unlocking the political support that comes with it while staying in the good graces of progressive constituencies that can shape a primary battleground,” a person familiar with the talks told me.

So far, senators and aides from both parties told me this week, the impending spending spree has not tainted their closed-door negotiations. They also recognized that the current situation might not hold.

“Fortunately, no one raised these issues in our meetings — and I hope it stays that way,” Sen. Cynthia Lummis, who is pushing for a committee vote next week, told me. “We just busted our pants to try to keep that bipartisanship.”

“No one can deny that it’s a big bazooka,” the Wyoming Republican added of cryptocurrencies. “In a way I wonder if this is being misused, not by the industry, but by politicians.”

For progressives opposed to crypto legislation, it is a question of not shaking the American financial system, but also of not voting to enrich the president. Trump-affiliated crypto companies have made his family billions of dollars this year, even after recent losses.

And potential candidates for the 2028 presidential election are closely following, or even participating in, the talks. Lummis said Tuesday that the White House recently rejected a bipartisan ethics proposal from her and Sen. Ruben Gallego, D-Ariz., a rising star in the party.

More than 100 House Democrats voted with Republicans to pass their version of the crypto bill in July, but senators had yet to reach consensus on key parts of their version — like those ethical guardrails, as well as illicit finance and consumer protections — as of Wednesday afternoon.

Fairshake, who is bipartisan, spent equal amounts on Republicans and Democrats in 2024. But his spending spree in the Ohio Senate race is widely credited with helping Republicans flip the House.

“I hope we approach this issue with the seriousness that it requires, and not allow ourselves to be swayed or pressured by the politics of this matter,” Sen. Andy Kim, D-N.J., told me.

“There’s a lot to manage, and I hope this isn’t seen or used as a political stick as we enter the midterm year,” he added.

When senators gathered to discuss crypto negotiations Tuesday morning, the chairs of the Senate Democrats’ and Republicans’ campaign arms were both present in the room. DSCC Chair Kirsten Gillibrand, D-N.Y., is a longtime advocate for crypto legislation, while NRSC Chair Tim Scott, R-S.C., also chairs the House Banking Committee.

“The Democratic Party has and should continue to be the party of opportunity and innovation,” Gillibrand said in a statement, adding that “our current bipartisan effort around market structure centers around shared and universal goals” and that senators from “both parties are working in good faith at this time.”

Not everyone involved in crypto negotiations sees the industry’s war chest as a liability. Some people close to the discussions told me that things remained focused on politics — and pointed out that another big-spending sector, traditional finance, functions as a counterweight to cryptocurrencies.

“Fairshake is not as scary as they would have you believe,” a senior Democratic aide said.

• Another candidate for 2028, California Governor Gavin Newsomis not involved in Hill’s talks but has considered his own crypto-memecoin (to troll Trump), according to Politico.

• Scott has his own crypto crisis to deal with, as Politico also reported.