Coinbase Is The First Crypto Company To Form A Political Action Committee

Coinbase has become the first cryptocurrency company in the USA to create its own Political Action Committee (PAC) as the crypto industry begins to assert itself as a long-term business concern in the world’s biggest economy. This was revealed in a filing released on June 20, 2018, by the United States Federal Election Commission (FEC).

What is a PAC?

According to Investopedia, a PAC is an organization formed to privately raise donations for a political campaign in hopes of influencing the results of an election without directly donating to the campaign. Under American federal law, an organization is considered to be a PAC if it raises a minimum of $2,600 intended to influence the outcome of an electoral process, and all PACs must register with the FEC.

PACs are permitted to donate up to $5,000 per candidate per election and $15,000 per party per year. They may also donate a maximum of $5,000 to another PAC every year. Following the 2010 Citizens United vs. FEC case, a new type of PAC called a ‘Super PAC’ was created, with the ability to spend an unlimited amount of funds toward influencing elections.

Coinbase PAC Implications

Why would a crypto exchange and wallet provider based in San Francisco want to create a Political Action Committee? Well, mostly to help its business scale through regulatory challenges through political influence. Coinbase co-founder Fred Ehrsam has previously been identified as a Republican-leaning campaign donor with total political donations totaling $12,800. Notably, he donated $4,800 to Mitt Romney between 2007 and 2011, in line with the pro-business, ‘light touch’ regulatory policy framework of the Republican party.

This, however, goes much further than seeking to help candidates with a pro-business outlook. A PAC led by Coinbase has broader implications for the crypto industry, which has historically been viewed with suspicion by the US establishment. For the first time, the crypto industry potentially has a seat at the table to dialogue with political candidates and establish key points of understanding regarding financial regulatory policy.

For Coinbase, the PAC formation comes at an essential time after the launch of its widely anticipated custody service. Business Insider recently reported that the company secured a $20 billion hedge fund client for the service. The company is also set to launch brokerage services, which is not likely to sit well with the Securities and Exchange Commission (SEC).

Its services as an exchange platform and its function as a broker may be seen to constitute a conflict on interest, which is where the ability to engage in regulatory dialogue with politicians through its PAC may be useful.

According to the FEC filing, Coinbase has not raised any money through the PAC as of June 30, 2018. What its broader political engagement strategy will remain to be seen.

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