Crypto Gears Up for New Jersey, New York Governor Election #CriptoNews

Mayor Steve Fulop of Jersey City, New Jersey, was running for governor when he announced that he would invest part of his city’s pension fund in bitcoin.

Rep. Ritchie Torres, D-N.Y., was toying with a challenge to New York Gov. Kathy Hochul when he co-sponsored a resolution calling blockchain technology “the future of innovation.”

Between them, the two represented an emerging trend among ambitious Democrats: Candidates angling for state office are touting support for the cryptocurrency industry.

For crypto, the trend could yield rewards. Industry players would like to see friendly state-level financial regulation, loose rules for energy-intensive cryptocurrency mining, and potentially even state pension fund investments in their products.

One industry critic chalked up the trend of Democrats paying homage to crypto to the industry’s money cannon.

“I think it boils down to two words: opportunism and fear,” said Mark Hays, who works for the groups advocacy groups Americans for Financial Reform and Demand Progress. “I don’t think it gets more nuanced than that.”

“Right now, a lot of folks are worried about being on the wrong side of that money.”

For politicians, the push for crypto could draw votes from the young men mostly likely to trade crypto, but there could be bigger rewards to be reaped by attracting deep-pocketed industry donors. Supporters of crypto threw around large sums of money in last year’s elections for national offices and won nearly across the board.

“The crypto industry, because the industry can print its own money, somewhat literally and metaphorically, it is able to pull a lot of money into electoral races and lobbying activity,” Hays said. “Right now, a lot of folks are worried about being on the wrong side of that money.”

The move, though, could also invite backlash from Democratic primary voters at a time when the Dogecoin brand has been coopted by Elon Musk’s slash-and-burn government office and President Donald Trump has launched a meme coin of his own.

Becoming Power Players

Cryptocurrency companies have taken an improbable journey over the past decade from Silicon Valley startups to Washington power players.

They first flexed their might in 2022, when Sam Bankman-Fried and other executives at the fraudulent crypto platform FTX showered tens of millions of dollars on Democratic and Republican campaigns.

Bankman-Fried was behind bars by 2024, but other industry figures banded together on a super PAC that spent nearly $200 million on congressional races.

The group was officially bipartisan and spent millions on Democrats, but it leaned Republican. The spending allocation may have ended up helping tip control of the Senate to Republicans and alienated one Democratic megadonor, who quit the effort in protest and eventually received a refund for his contribution.

Last year, the House of Representatives overwhelmingly passed the crypto’s top legislative priority, a bill called Financial Innovation and Technology for the 21st Century, or FIT 21, that would slide most cryptocurrencies under an industry-friendly regulatory agency called the Commodity Futures Trading Commission.

Many Democrats were in favor of the bill — including two running in the crowded primary for the New Jersey governor’s race. Both of them, Rep. Mikie Sherrill and Rep. Josh Gottheimer, have been rated by the trade group Stand With Crypto as “strongly” supporting the industry.

Neither Sherrill nor Gottheimer has talked up crypto on the campaign trail, and the issue has largely flown under the radar, according to an observer of state politics.

“To most of the public, they haven’t encountered it in the gubernatorial race,” said Kristoffer Shields, the director of the Eagleton Center on the American Governor at Rutgers University.

Shields still believes there are voters who care intensely about the issue, given the many finance industry professionals who work in New York City and Philadelphia but live in New Jersey.

Public Pension Investments

Fulop, the Jersey City mayor and a former Goldman Sachs banker, may have had those voters in mind when he announced in July that he would be investing part of Jersey City’s pension fund in bitcoin.

Fulop said on X that he had “been a long time believer (through ups/downs) in crypto” and that blockchain, the technology underlying cryptocurrencies, “is amongst the most important new technology innovations since the internet.”

“I believe in asset class diversification as a responsible investment strategy.”

In a statement, Fulop said the city has allocated only a small percentage of its pension holdings to bitcoin through an exchange-traded fund and that it has performed well since the purchases began in November.

State pension funds represent an attractive opportunity for crypto companies, who have begun lobbying states to invest in their products. If elected to the governor’s mansion, Fulop said he would be open to investing some of the state’s pension money in cryptocurrencies.

“Similar to what we’ve done with Jersey City’s pension fund, I believe in asset class diversification as a responsible investment strategy,” he said. “Allocating 1 to 2 percent of a portfolio to crypto can provide reasonable exposure while managing risk appropriately.”

From a political perspective, Shields said, investing in crypto could worry voters about losing money on risky bets. He believes, however, that associating with crypto also provides politicians to grab on to a rare issue that cuts across party lines.

“The ones who do care care a lot.”

“Most constituents haven’t thought too much about it or don’t care about it,” he said. “But the ones who do care care a lot.”

So far, the industry has not directed its vast campaign holdings into the New Jersey gubernatorial race. At least three of the Democrats have received campaign donations from crypto companies or leaders, however.

Crypto-aligned super PACs spent $242,000 backing Gottheimer during the last election cycle and crypto figures donated $51,000 directly to his campaign organizations, according to the tracker website Follow the Crypto. Money donated to his federal campaign account cannot be transferred to his state account.

Industry figures have given far less — $3,333 — to Sherrill, who is leading in the polls so far.

A super PAC supporting Fulop, meanwhile, received a $10,000 donation from Gregory Tusar, a vice president at the cryptocurrency exchange Coinbase.

“Greg and I have been personal friends for 20 years,” Fulop said in a statement. “We worked together in algorithmic trading at Goldman Sachs long before cryptocurrency even existed. His support of Coalition for Progress has nothing to do with the crypto industry.”

New York Governor’s Race

Across the Hudson River, the contours of the 2026 New York governor’s race are already taking shape. Sitting Gov. Kathy Hochul’s weak poll numbers have encouraged other Democrats to consider a primary challenge.

Hochul in 2022 earned the enmity of the crypto industry by signing a two-year moratorium on cryptocurrency mining, which was motivated by concerns from environmentalists that it would incentivize the reopening of dirty power plants. So far, two rumored Democratic contenders to Hochul have strong connections to crypto.

Lt. Gov. Antonio Delgado was backed by a $1 million donation from an SBF-associated super PAC during his 2022 campaign, which drew accusations that he was supported by “dirty” money even before the collapse of FTX. Delgado’s office did not respond to a request for comment.

Meanwhile, Torres, the New York representative in Washington, has repeatedly touted the benefits of crypto from his perch in Congress. He lambasted regulators under former President Joe Biden for trying to crack down on companies such as Ripple Labs and Coinbase for violating securities laws.

Both companies contributed to a network of super PACs that backed Torres with $173,000 in spending during the last election cycle. (Torres did not respond to a request for comment.)

During his time in Congress, he has sponsored at least eight pro-crypto measures, the most recent a resolution expressing general support for digital assets and blockchain technology.

“Blockchain technology and digital assets represent the future of innovation, economic growth, and financial inclusion,” Torres said in a February 5 statement accompanying the measure’s introduction. “The United States must lead in shaping a regulatory framework that fosters technological advancement while protecting consumers and ensuring transparency. By embracing this next generation, we can create a more equitable financial system that benefits every American.”

$TRUMP

Torres, one of two Democrats to co-sponsor the crypto resolution, was embracing crypto at a moment when crypto was embracing Trump.

Coinbase CEO Brian Armstrong was one of the first executives to meet with Trump after his election in November. Last week, the company announced that the Securities and Exchange Commission would drop a 2023 lawsuit against it.

“There is not much daylight at all between Elon Musk’s worldview and key leading figures of the crypto industry.”

One of the biggest launches in the crypto world in recent months was by Trump himself, with the introduction hours before his inauguration of the $TRUMP token. The Trump coin sparked a backlash in the crypto world from figures who worried it would harm the industry’s reputation.

Hays, the advocate with Americans for Financial Reform and Demand Progress, said candidates should be cautious when embracing the industry, because they may wind up embracing a worldview that alienates their voters.

“Many, many people are concerned about what Elon Musk is doing. There is not much daylight at all between Elon Musk’s worldview, his goals and objectives, his ideas about how society should effectively be run by techno elites, and key leading figures of the crypto industry,” he said. “Those people see crypto as not only a representation of that worldview, but a means to an end.”