Crypto Companies Step Up Spending on Lobbying in 2023
by Oskar Trotman
The cryptocurrency industry has been hailed as the next gold rush, promising to inaugurate a monetary revolution. However, the situation is not all roses, with multiple scandals tarnishing its image and discouraging investors. Equally importantly, legislators are divided about the future legal status of the industry. The response from crypto companies has been to pump more money into lobbying efforts.
The analytical data for the first three quarters of 2023 reveal that nearly $19 million has been spent on campaigns to convince politicians in the U.S. that blockchain deserves a positive outlook. The report from the non-profit research group OpenSecrets shows that companies are investing more in lobbying compared to 2022, when $16 million was spent in the first nine months of the year, for a total of $21 million for that year.
Assessing the impact of lobbying is problematic for any industry. However, it’s becoming obvious that elected officials are beginning to invest in blockchain tokens, and few are backing favorable bills. However, it’s unclear if this shift in attitude is a product of lobbying or if politicians are following trends.
Lobbying Is Not Cheap
Several adverse events hit the crypto sphere in 2022, with the FTX downfall having a seismic effect, motivating regulatory agencies to increase their scrutiny of the industry. However, the industry is not collapsing, nor is it retreating, but is going on the offensive by increasing lobbying on Capitol Hill.
Securing friendly legislation is not cheap. Numbers clearly illustrate the ramping up of spending for lobbying. The trend started in 2017 when, from today’s perspective, a modest $200,000 was allocated for buying support from lawmakers. The following year, $920,000 became available for educating policymakers, and the amount rose by $3 million for the period of 2020 and 2021.
The crypto industry is poised to achieve a new record in 2023 for spending on federal lobbying. Coinbase is the top spender in 2023, with $2.16 million allocated to secure political capital in Washington. Some other companies’ increasing efforts to change the attitude of political elites are Foris DAX, Binance Holdings, and the Blockchain Association.
Companies are trying to foster relationships and engage with policymakers. According to Kristin Smith, chief executive officer of the Blockchain Association, the goal is to bridge the education gap and create a commonsense regulatory framework.
Crypto Advocacy Will Continue
Crypto firms are actively working on navigating increased regulatory scrutiny. The U.S. Securities and Exchange Commission is trying to make an example of the industry’s leaders, Binance and Coinbase, claiming various irregularities. Not surprisingly, these companies are taking the lead in crypto advocacy.
The industry is working on promoting friendly legislation in the House of Representatives, with two major bills passed this year, which can offer clarity for financial rules applicable to crypto companies. Crypto lobbyists are continuing to push for more engagement with lawmakers.