In 2023, U.S. crypto firms increased lobbying spending to shape regulations and recover from industry scandals and challenges.
The crypto sector in the United States is on pace to surpass its previous federal lobbying expenditure record in 2023. This trend emerges as the industry seeks to revamp its image and promote beneficial legislation. Data from the nonprofit research organization OpenSecrets reveals that crypto firms invested approximately $18.96 million in lobbying activities during the initial three quarters of 2023. This figure marks an increase from the $16.1 million spent in the corresponding period of 2022. This hike in lobbying expenditure comes despite the dramatic collapse of FTX, a former major player in the crypto exchange market and a significant spender on lobbying.
Leading the charge in lobbying efforts is Coinbase, the largest crypto exchange in the U.S., with an expenditure of $2.16 million. Other prominent spenders include Foris DAX, the operator of Crypto.com, the Blockchain Association, and Binance Holdings. Kristin Smith, the CEO of the Blockchain Association, emphasizes the industry’s aim to work closely with policymakers to create a regulatory framework that is both practical and well-informed.
Crypto Industry Challenges and Regulatory Pressures
The increased investment in Washington represents the crypto industry’s response to various challenges, including the infamous downfall of FTX and the subsequent trial and conviction of its former CEO, Sam Bankman-Fried, for fraud. This event left a significant dent in the industry’s reputation, prompting a push for better public perception and stronger regulatory relationships.
Another driving force behind the escalated lobbying efforts is the industry’s battle against increased scrutiny from regulatory bodies like the U.S. Securities and Exchange Commission (SEC). The SEC has accused the crypto sector of consistently violating its rules, particularly after filing lawsuits against Coinbase and Binance for alleged failure to register tokens – allegations both companies refute.
In addition to addressing these regulatory challenges, the crypto industry is actively promoting the approval of a Bitcoin spot exchange-traded fund (ETF). The expectation of SEC’s approval of this ETF, especially after a pivotal court decision in the summer, has contributed to the recent surge in bitcoin value.
Moreover, the industry has made significant progress in the legislative arena. In July, a congressional committee passed two major bills that, according to lobbyists, will provide greater clarity on how existing financial regulations apply to crypto firms. While these bills await further advancement, lobbying efforts continue unabated. For instance, Coinbase is intensifying its advocacy efforts through increased meetings with lawmakers in the upcoming weeks, as confirmed by a company spokesperson.
Through these concerted efforts, the U.S. cryptocurrency industry demonstrates its commitment to not only restoring its image but also shaping a regulatory environment conducive to its growth and stability.