According to the Federal Election Commission (FEC), Coinbase has formed a PAC (Political Action Committee), becoming the first crypto-based company to do so in the United States. This has been the latest among other bold moves targeting at cementing its future.
The Purpose Of Forming A PAC
The American Federal Law states that an organization can be classed as a PAC after it has collected donations totaling more than $1000 among its members and uses these funds to donate to a political campaign with the aim of having influence over an electoral process. It would also have to register with the FEC as dictated by the 1974 Federal Election Campaign Act.
Organizations form Political Action Committees in order to financially support candidates with ideologies and policies that are in tandem with the members of the PAC. PACs also create an environment where dialogue concerning social, political and economic interests can take place as well as provide a suitable platform where holders of political offices can easily communicate the public to promote further understanding of the office and facilitate easy cooperation.
The Significance Of A Crypto Backed PAC
The most obvious benefit for an organization in forming a PAC is having easy access to politicians who can influence the policies of whichever field the organization is in. For Coinbase, it would seem that they seek to establish better ties with politicians who have a significant influence on the regulation of policies in the financial sector. With the political and financial arena in the United States being wary of the crypto space, a PAC would be very useful in establishing a dialogue with these two sectors by supporting candidates who advocate for easier regulations.
With increased regulation being directed to the crypto sphere, a crypto-based PAC would be effective in establishing a connection to and engaging with the politicians who influence the financial policies and may act to lessen the regulatory attention. Some of the main benefits that the crypto sphere could get with this relationship would include clarification in the regulations, promoting the job creation that the crypto industry has enabled and promoting the use of Blockchain technology in offering solutions for some of the challenges experienced in the public sector.
Strategic Political Engagement
Though the move to form a PAC has been a first in the crypto sphere, Coinbase is not new to the strategies of establishing political engagement and the role of donations in furthering a business’ agenda. Fred Ehrsam, who is the co-founder of Coinbase, has been known to be closely linked to the Republican side. It has been rumored that he has over the years donated to the Republican side a total of $12,800. He also donated to the Mitt Romney campaign in the recent past between 2007 and 2011.
Coinbase has in the past been looking to establish itself as a regulated brokerage firm as well as a trading platform. This is yet another point of discussion that could be aided by the PAC, seeing as this could be considered a conflict of interest by the SEC.