By George Ward
Surging Crypto Lobbying Expenses
The crypto industry has surprisingly increased its federal lobbying spending to drive the official embrace of the sector. Data from OpenSecrets, a non-profit research group, revealed a strong push by crypto firms to improve their image and advance supportive legislation.
During the first three quarters of 2023, crypto entities spent $18.96 million on lobbying, far exceeding the $16.1 million spent during the same period in 2022. This rise is surprising given that a major spender in previous years (the FTX crypto exchange) collapsed last year.
Recall that collective lobbying spending peaked at nearly $22 million in 2022, spearheaded by companies like FTX. This substantial investment shows the industry’s commitment to influencing policy and regulations.
The increased spending aims to mitigate the fallout from previous missteps, most notably the FTX debacle, while actively shaping a positive regulatory environment. With the apparent shift toward positive engagement, crypto companies are attempting to rebuild trust and advocate for legislation supporting their growth and stability.
As these companies shift their focus to advocacy, the increase in spending highlights their commitment to creating an environment that fosters innovation while addressing regulatory concerns.
Largest Spenders
The US’ largest crypto exchange, Coinbase, continues to lead the charge among the top lobbyists with an investment of $2.16 million. Others include Binance Holdings, Crypto.com’s operator Foris DAX, and the Blockchain Association.
According to Kristin Smith, CEO of the Blockchain Association, the association aims to engage directly with policymakers. Thus, it can develop relationships and bridge the knowledge gap to create a comprehensive regulatory framework.
Moreover, this year’s spending trends indicate that other crypto firms are making a concerted effort to mitigate the fallout from FTX’s debacle following last month’s imprisonment of its former CEO, Sam Bankman-Fried. Against this backdrop, crypto entities are stepping up their efforts to a more favorable regulatory environment.
Pushing For Regulatory Clarity
Crypto exchanges face increasing regulatory scrutiny over industry regulation violations, particularly from the US Securities and Exchange Commission (SEC). In separate lawsuits, Coinbase and Binance deny the SEC’s accusations of non-compliance with token registration requirements.
Hence, it is no surprise that they’re intensifying lobbying efforts to address these issues. Furthermore, securing the SEC’s approval for a spot bitcoin exchange-traded fund (ETF) has become a vital objective for the industry.
Industry players believe the approval could significantly broaden access to the world’s leading cryptocurrency. Furthermore, the SEC’s legal setback in a critical court case has fueled BTC enthusiasts’ optimism and is one of the reasons for Bitcoin’s price rise to a 20-month high recently.
Furthermore, crypto enterprises’ active engagement with the House of Representatives to gain legislative support paved the way for a congressional committee to pass two consequential bills in July. These bills define the applicability of existing financial regulations to crypto entities.
While these bills await further action, industry players show no signs of slowing down. For example, Coinbase launched a grassroots advocacy initiative in September and plans to ramp up efforts through upcoming discussions with lawmakers.