In a surprising turn of events, a prominent pro-cryptocurrency political group, Fairshake PAC, has invested millions of dollars in support of Democratic candidates in key U.S. Senate races in Arizona and Michigan. This move has raised eyebrows among top Republicans, who had previously viewed the cryptocurrency industry as an ally rather than an opponent.

Fairshake PAC and its affiliated super PACs have earmarked substantial advertising spending for three U.S. Senate races this cycle. They have announced commitments of approximately $3 million each to Democratic representatives Ruben Gallego in Arizona and Elissa Slotkin in Michigan. This spending could potentially disrupt GOP efforts to secure seats in two crucial battleground states in the fight for control of the Senate, especially in the current hostile regulatory environment for cryptocurrencies.

When contacted for comment, Fairshake PAC referred NBC News to the current A-ratings received by Gallego and Slotkin from Stand With Crypto, a nonprofit organization advocating for the crypto industry. Both Democratic representatives have crossed party lines this year to support a significant crypto bill.

Slotkin's stance on cryptocurrency had previously been skeptical until a recent change of heart. The Michigan lawmaker received an F-rating from Stand With Crypto as recently as March but has since shown support for the crypto industry. Gallego, on the other hand, had previously failed to back legislation favored by the crypto industry. In 2022, he praised a candidate for "slaying the Crypto beast" and signed onto a letter spearheaded by Senator Elizabeth Warren, D-Mass., addressing crypto-financed reforms. Gallego has also criticized business owners like Elon Musk for promoting Bitcoin and profiting from cryptocurrencies.

Despite these developments, a spokesperson for Fairshake PAC, Josh Vlasto, stated that their super PAC and affiliates are committed to supporting candidates who embrace innovation, protect American jobs, and work across party lines. They aim to oppose those who do not share these values.

The crypto industry and its aligned super PACs have amassed over $100 million for spending in House and Senate races. This effort aims to shape a favorable regulatory landscape by bolstering crypto-friendly candidates. In Ohio alone, Fairshake PAC is targeting $12 million in support of a Republican Senate candidate running against Democratic Senator Sherrod Brown, who is perceived as a crypto skeptic by industry advocates.

Fairshake PAC is primarily funded by digital asset firms such as Ripple, individual donors affiliated with venture firm Andreessen Horowitz, and Coinbase, the largest U.S. cryptocurrency exchange.

Republican operatives argue that the crypto industry presents a growth opportunity that the party has rightly embraced. They highlight its potential for fundraising, attracting younger voters, and setting up contrasts with Democrats, positioning Republicans as the party of the future.

However, tensions are rising as alarmed Republicans question Fairshake PAC's strategic moves and their potential loss of influence with the GOP after cultivating hard-won relationships. They also express skepticism about the durability of Gallego and Slotkin's support for crypto interests.

One senior GOP Senate aide likened Fairshake's actions to the Chamber of Commerce's support of anti-business House Democrats during the Inflation Reduction Act discussions. This comparison suggests that Fairshake's support may be misguided, given its alignment with a cohort potentially hostile to its interests.

The spending by Fairshake PAC was a hot topic during recent retreats hosted by the Congressional Leadership Fund super PAC and House Speaker Mike Johnson in Jackson Hole. Prominent figures from Coinbase and other crypto groups attended these retreats alongside Marc Andreessen, a well-known entrepreneur and venture capitalist. Andreessen and his business partner, Ben Horowitz, have endorsed former President Donald Trump in the presidential race and have criticized the Biden-Harris administration's regulatory agenda.

The crypto industry leader, granted anonymity for candidness, expressed concern about Fairshake PAC's strategic decisions, stating that it is surprising for a major trade association to target allies with their resources.

Trump's stance on cryptocurrencies has shifted significantly since his time in office. He now promises crypto-friendly policies if elected, accepting Bitcoin donations for his campaign, and selecting running mate JD Vance, perceived as a win for the crypto industry. Vance advocates for looser regulation of cryptocurrencies and discloses substantial holdings in Bitcoin among his assets.

Mackowiak attributes this shift in part to generational factors, with Vance playing a role in convincing Silicon Valley investors to support Trump's campaign.

A former Trump regulator believes that a future Trump administration would bring a more nuanced approach to crypto regulation but acknowledges that a regulatory shift is expected regardless of the presidential election outcome.

Meanwhile, Vice President Kamala Harris is reportedly seeking a "reset" with the crypto industry. Executives from Coinbase, Ripple, and Kraken have expressed their concerns during a Zoom call with Harris. The Democratic Party has also launched a Crypto4Harris group aiming to formalize ties with the vice president. Top Harris surrogates are signaling a more favorable regulatory environment should she win in November. Maryland Gov. Wes Moore has promised a more business-friendly framework under a Harris presidency compared to the Biden administration.

However, skepticism remains among some industry observers regarding Harris's commitment to supporting the crypto industry. The former regulator questions whether Harris can convince industry proponents that she has changed her stance or if her overtures are merely rhetoric. He emphasizes that crossing Senator Elizabeth Warren would be a significant challenge for Harris in winning over crypto supporters.