As Harris Embraces Crypto, Her Coalition Holds — For Now

Vice President Kamala Harris is cozying up to the cryptocurrency industry in the final stretch of the presidential campaign, embracing an industry scorned by progressives and giving hope to moderates who want her administration to take a more business-friendly approach to the economy.

Progressive policy makers largely celebrated the economic approach of President Joe Biden, whose administration embarked on an effort to reverse what liberals saw as 40 years of corporate dominance of policy-making in Washington. The approach also kept the Democratic Party, which seemed at the edge of an ideological fracture during the 2020 primaries, largely united.

Harris’ embrace of crypto ― coming just two years after the collapse of FTX, the cryptocurrency exchange that embarrassed the industry and erased more than $1 trillion of investment, including many people’s life savings ― is her most noteworthy reversal from Biden’s economic approach so far.

Her crypto-friendly approach is partially a reflection of how the industry has used money to conquer Washington. It has won allies throughout Congress and managed to enlist a small army of digital asset holders to do its political bidding.

Whether it’s a sign of a broader ideological shift on Harris’ part is unclear, and the Democratic nominee may have an interest in keeping it that way as she tries to keep every possible element of the coalition happy ahead of an ultra-close November election.

Interviews with crypto supporters, opponents and Harris allies, however, point to a scenario where Harris may be seeking to correct what moderate Democrats view as a major mistake by the Biden administration ― an unwillingness in their eyes to even engage with the business community, including crypto ― without wholly abandoning many of the policies the party’s progressive wing loves.

“I find it telling that Vice President Harris is proactively signaling openness to embracing emerging technologies like blockchain,” Rep. Ritchie Torres (D-N.Y.), one of the biggest boosters of crypto in the Democratic Party, told HuffPost, referring to the decentralized ledger that undergirds the crypto system. “I actually think as a product of Silicon Valley, she has a natural openness to new technology, more so than the Biden administration.”

But a slightly more friendly approach to Silicon Valley (Harris mentioned AI, quantum computing and blockchain as “sectors that will define the nation the next century” in an economic speech in Pittsburgh on Wednesday) does not inherently mean an abandonment of many of the labor-friendly, climate change-fighting industrial policies the Biden administration pursued.

“It’s easy to see why people think this is the Biden Administration plus Silicon Valley,” said Michael Madowitz, the principal economist at Roosevelt Forward, the political arm of the progressive think tank, the Roosevelt Institute. “But that doesn’t mean she can’t focus on balancing corporate power, on making sure American workers get a fair shake.”

Many of those progressive-friendly policies were included in an 82-page policy manifesto, “A New Way Forward For The Middle Class,” which Harris’ campaign released alongside her speech in Pittsburgh. They include hyping the Biden-Harris administration’s antitrust agenda, including their fight against junk fees. The manifesto also promises to take on anti-competitive practices in the pharmaceutical, food and housing industries.

In the same speech, however, she took care to deliver some calming words to the business community, saying she knows “the limitations of government.” She added: “I’ve always been and will always be a strong supporter of workers and unions, and I also believe we need to engage those who create most of the jobs in America.”

What may ultimately determine the ideological direction of Harris’ administration is who she hires. Crypto supporters are determined to oust Securities and Exchange Commission Chairman Gary Gensler, for instance. And the presence of Harris campaign advisors with closer ties to big tech means the door may be open more for policy hands with private sector experience.

One obvious instance: Tony West, Harris’ brother-in-law who is on leave from his job as the chief legal officer at Uber is almost certain to get a top role in her administration. And allies of Silicon Valley in D.C. are hopeful Harris’ closer geographical and generational ties to tech mean more open lines of communication than existed with Biden.

“There’s going to be a greater willingness to hire people who worked in the private sector. That doesn’t mean there’s no room for people on the left,” said Caitlin Legacki, who worked as a top aide to Commerce Secretary Gina Raimondo, one of the more moderate figures in the Biden administration’s economic policy-making world. “You don’t have to sell the White House to corporations, but you should have someone to pick up their phone calls.”

In 2020, while Biden mostly appointed mainstream, experienced hands to lead roles at agencies and cabinet departments, progressives took many critical behind-the-scenes roles. This led to frequent grumbling, from both Republicans and moderate Democrats, about Biden’s administration looking like one assembled by Warren, whom he vanquished in the 2020 primary.

Now, as some of those same progressives fight for their jobs, popularity looms as a potentially deciding factor. Khan, for instance, has kept an aggressive schedule appearing with influential progressives like New York Rep. Alexandria Ocasio-Cortez, old hands like Rep. James Clyburn of South Carolina, and swing-state senators like Bob Casey of Pennsylvania and Jacky Rosen of Nevada. (Even still, Legacki predicted Harris would “be more selective about fighting ideological battles” when it came to antitrust.)

These same popularity contests, however, may doom Gensler, who has emerged as a unique target of industry ire, and who seems to lack the same popular backing benefiting Khan. And while the Biden administration’s anti-monopoly posture has been generally popular with the public ― Kahn and Harris both have linked it to lower housing and health care costs ― its antagonistic relationship with crypto is seen as unlikely to win over many voters.

Politically, Harris’ approach seems to be working. The economy had been a huge advantage for former President Donald Trump in his matchup against President Joe Biden, but Harris has closed the gap. Forty-three percent of voters said they trusted Trump on the economy in an Associated Press-NORC Center for Public Affairs Research survey last week, compared to 41% for Harris, with 15% saying they trusted both or neither.

The FTX collapse in November of 2022 scared off most Democrats from engaging with crypto, which the Biden administration did not exactly consider a critical issue when they took office in 2020. Many top officials in both parties viewed the industry as a sideshow, good for little more than slurp juice jokes as some rushed to return the substantial donations they accepted from FTX Chairman Sam Bankman-Fried and his allies.

That left an opportunity for crypto critics like Sen. Elizabeth Warren (D-Mass.) and SEC Chair Gary Gensler.

As the Biden White House focused on other topics, the SEC continued bringing dozens of cases against crypto firms for failing to comply with the securities laws enacted in the 1930s to protect investors from financial scams ― laws requiring basic disclosures such as the identities of the people in charge.

As the FTX collapse faded from public memory, crypto advocates resumed their quest for new rules, claiming the old securities laws shouldn’t apply. In May, the House of Representatives obliged by passing a bill that would diminish the SEC’s oversight of the industry. Nevertheless, the legislation passed with bipartisan support ― 71 Democrats joined nearly every Republican in favor ― but it was ignored by the Democratic-controlled Senate.

Senate Democrats have sought to advance their own proposals that would reduce the role of the SEC in overseeing digital assets, but those too, have stalled due to GOP opposition.

Meanwhile, the influence of the crypto lobby only grew.

Crypto super PACs have spent tens of millions of dollars against Democratic candidates across the country, including in several critical Senate races that could determine control of the chamber next year. And it’s not just Republicans who are courting crypto donations: Future Forward, the leading super PAC supporting Harris’ presidential campaign, began accepting cryptocurrency donations earlier this month.

“What’s alarming is the capacity of billionaires and the crypto folks to put $40 million in Ohio, maybe put $60 million in Pennsylvania,” said Sen. Peter Welch (D-Vt.). “You know, it’s just as a reminder how messed up our political system is that folks with that kind of cash have such outsized influence.”

“Most people don’t understand it, but it’s powerful, and it’s money,” the senator added.

Earlier this summer, Senate Majority Leader Chuck Schumer (D-N.Y.) and other Democrats joined a “Crypto4Harris” virtual town hall to show support for digital assets. The event featured billionaire entrepreneur Mark Cuban, who has emerged as one of Harris’ top corporate go-betweens. Harris has also dispatched her top policy aide, Brian Nelson, to woo crypto industry figures.

“There’s been a real tangible effort from them to listen to us, hear from us, and reassure us — without making any hard commitments — and talk about crypto in a constructive way,” a source familiar with the Harris campaign’s outreach to the crypto community told HuffPost.

Republican presidential nominee Donald Trump has spent substantial time courting the crypto fan base, which skews younger, male and caucasian. He even rolled out his own cryptocurrency business earlier this month. (The former president has had his own evolution on crypto. As recently as 2021, Trump called Bitcoin a “scam” and said cryptocurrencies in general were “potentially a disaster waiting to happen.”)

Whatever the reason, the tone shift has seemingly affected even some of crypto’s top critics. Rep. Maxine Waters (D-Calif.) said this week “crypto is inevitable,” while Warren took a non-confrontational tone when asked about Harris’s openness to digital assets.

“I’m fine with people buying and selling crypto,” Warren told HuffPost. “It’s very important that crypto follow the same rules as every other part of our financial system, and making sure it’s not exploited by drug traffickers, terrorists and countries like Iran.”

Following the same rules as the rest of the financial system, however, is exactly what crypto does not want to do. More than anything, crypto proponents also want the next president to fire Gensler. Cuban said on social media this week the Harris campaign told him they opposed the administration’s current approach to crypto, and he suggested that Gensler would be going away.

“CYA Gensler,” Cuban wrote. “You leaving is worth a point in GDP growth.”

Meanwhile, Republicans are skeptical that Harris’ embrace of crypto is legitimate and claim that she has little familiarity with the industry.

“She’s very close to Sen. Elizabeth Warren, and Elizabeth Warren hates digital assets,” Sen. Cynthia Lummis (R-Wyo.), a top GOP advocate of the sector, said of Harris. “I am more concerned with what I see, than what I hear.”