The crypto industry has been ramping up its lobbying efforts in recent years, particularly during the crypto winter that began in 2021. A new study published by the Money Mongers on February 23, 2023, sheds light on the increasing amount of money spent on lobbying by market participants in the United States.
According to the study, which analyzed data from OpenSecrets, a nonpartisan nonprofit organization that tracks lobbying expenses in the U.S., the crypto industry’s lobbying budgets increased by 922% over the past five years. In 2017, when Bitcoin’s price soared for the first time, the industry spent only $2.5 million on lobbying efforts. Last year, that number jumped to $25.57 million, and in 2021 alone, stakeholders raised their expenses by 121.41% to $11.54 million.
The study also found that the U.S.-based crypto exchange Coinbase was the largest spender, paying $3.3 million to 32 lobbyists in 2022. The Blockchain Association ranked second, with 18 lobbyists and $1.9 million spent, while Robinhood ranked third with 20 lobbyists and $1.84 million spent. Binance.US, the American subsidiary of the world’s largest crypto exchange, occupied only the ninth spot on the list with $960,000 spent in 2022.
Despite the increase in lobbying efforts, the overall expenditure of crypto companies on lobbying in America is modest compared to other industries. The pharmaceutical industry, for example, spent over $350 million in 2022 on federal lobbying efforts.
It’s worth noting that lobbying is an important aspect of any industry, as it allows stakeholders to advocate for policies that support their interests. In the case of the crypto industry, lobbying efforts may help shape regulations and laws that facilitate the growth and adoption of cryptocurrencies. It’s also worth noting that the increase in lobbying efforts may reflect the industry’s growing maturity and willingness to engage with policymakers.
Overall, the Money Mongers study highlights the increasing importance of lobbying in the crypto industry, particularly in the United States. As the industry continues to mature and grow, we can expect to see more lobbying efforts aimed at shaping regulations and laws that support its development.
A former executive at the World Economic Forum, Sheila Warren, will become the new CEO of the Crypto Council for Innovation.
The group seeks to lobby for and improve the regulatory climate for digital assets.
Attention from regulators, lawmakers has been ramping up in recent months.
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Sheila Warren, a former executive at the World Economic Forum, has been tapped to join the Crypto Council for Innovation as its CEO. The crypto lobby group hopes to shape crypto policy in the United States.
Warren Set to Lead Council
The blockchain and Web3 space has faced growing attention from lawmakers in the U.S. recently, and so crypto lobbying efforts like the Crypto Council for Innovation seem increasingly warranted.
A past executive of the World Economic Forum, Sheila Warren,will jointhe crypto lobbying group Crypto Council for Innovation as its CEO starting on Feb. 2. In addition to her role on the executive committee, she also worked as the World Economic Forum’s head of data, blockchain, and digital assets.
The Crypto Council for Innovation was founded in April of last year, and its prominent member organizations include Fidelity, Coinbase, Block, and venture capital firms Paradigm, Ribbit Capital, and Andreessen Horowitz.
Warren called the present moment “critical” for the crypto ecosystem, emphasizing the importance of the next two years for the digital assets space.
The World Economic Forum is a non-profit foundation headquartered in Geneva, Switzerland that was founded in 1971. Itbills itselfas the “International Organization for Public-Private Cooperation” and asserts that organizations should consider all stakeholders from all parts of society.
Warren saw last year’s $1.2 trillion infrastructure bill, which had tax language potentiallyproblematicto the crypto space, as a “massive wake up call to a lot of people.” She also highlighted the importance of the Biden administration’s comingexecutive orderforcing government bodies to propose crypto regulation.
Additionally, the SEC proposedlast weekan expansion of its definition of “securities,” which could negatively impact decentralized finance exchanges. Concerns were alsoraised last week about a provision to the America COMPETES Act that could give the Treasury power to wantonly prohibit transactions, possibly including crypto transactions. Last December, Senators scrutinized stablecoins and this month, Congress held a hearing examining the environmental impact of crypto mining. Finally, the Federal Reservereleasedits report on central bank digital currencies on Jan. 20.
Many bodies have been getting involved in oversight of the industry, and so crypto lobbying groups like the Crypto Council for Innovation, as well as the political action committee dubbed the GMI PAC that wasannouncedlast Friday, which seeks to fund candidates in the coming November midterm elections to the tune of $20 million, are increasingly relevant.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
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In 2020, Ripple Labs ran what may have been the cryptocurrency industry’s most expensive lobbying program, appealing to legislators to reconsider how securities laws classified and regulated crypto.
All in all, last year, Ripple Labs spent $690,000 for lobbying. Although it was the biggest amount of money spent on lobbying programs by anyone in the crypto industry, it was nonetheless not able to save Ripple from the Securities and Exchange Commission’s overpowering reach.
While Ripple’s lobbying expenses dwarfed that of other firms in the crypto industry like Coinbase, who spent $230,000 in the same year, it was nowhere comparable to the amount spent by tech giants such as Facebook. The latter spent over $5 million in the quarter of 2020 for lobbying purposes.
In 2020, Ripple transitioned from an in-house lobbying team to contracting professional lobbying firms. It funded bills such as the Token Taxonomy Act and the Digital Commodity Exchange Act, which were legislative pieces laying the groundwork for what cryptocurrencies would fall under the scope of securities and what would not.
The way securities laws operate is essential to Ripple’s business, as evidenced by the current lawsuit it now faces for XRP sales. Per the Securities and Exchange Commission, XRP should be classified as a security, which makes the $1.3 billion raised through its sale by Ripple Labs and its chief executives a violation of federal securities laws.
Petition filed with White House for XRP
Ripple Labs’ lobbying efforts is echoed by that of its community, a group of crypto hopefuls who have filed a petition with the White House at the beginning of the year demanding it declare XRP a virtual currency.
Per the petition, Ripple supporters believed the Securities and Exchange Commission’s lawsuit to be uncalled for, as they argued that XRP was previously classified as a currency by the Financial Crimes Enforcement Network (FinCEN).
They also evoke the fact that the SEC’s lawsuit alleging that XRP should be registered as a security has been damaging to the US market, wiping out billions of investments.
Currently, the official pre-trial court date for the lawsuit against Ripple is set for February 22, 2021, and will be hosted via video call.
As it is a pretrial, the hearing will be to ensure that the case is ready to proceed to trial on the designated date. Analisa Torres, the United States District Judge, has demanded that both Ripple and the SEC present compelling arguments for the case, including potential motions and the likelihood that a settlement could be agreed upon.
