Cryptocurrency companies have descended upon Capitol Hill in a bid to advocate for legislation favorable to the industry. Executives from various digital asset firms, organized by Coinbase, the largest U.S. crypto exchange, and Stand With Crypto, a nonprofit founded by Coinbase, are engaging with lawmakers as part of a grassroots advocacy campaign.
Their primary goal is to promote bills that would provide much-needed clarity on how existing financial regulations apply to the crypto sector. However, the crypto industry's efforts may face challenges due to the ongoing budget debate and a Senate crackdown on the use of cryptocurrencies for money laundering.
In July, the House Financial Services Committee passed two significant bills aimed at shedding light on regulatory matters within the crypto industry. Crypto lobbyists hope to persuade lawmakers to advance these bills through Congress.
However, the current legislative landscape is crowded with lawmakers focused on averting a government shutdown and prioritizing other bills, including the Farm Bill and the National Defense Authorization Act (NDAA). These competing priorities may make it difficult for the crypto industry's voice to be heard.
Katherine Dowling, General Counsel and Chief Compliance Officer at Bitwise, a crypto investment manager, acknowledged the challenges, saying, "There's a mind-boggling number of competing areas but... we need to keep pounding the table."
Crypto companies have been ramping up their presence in Washington to address mounting regulatory scrutiny, particularly from the Securities and Exchange Commission (SEC). The SEC has accused Coinbase and its rival Binance of failing to register certain tokens, leading to increased lobbying efforts by the crypto industry.
New data provided by OpenSecrets to Reuters showed that the crypto industry spent nearly $13 million on federal lobbying in the first half of 2023, putting it on track for another record year after spending $21.6 million in 2022. Coinbase led the pack with $1.4 million in lobbying expenses.
As part of the advocacy campaign, Coinbase CEO Brian Armstrong and executives from various crypto firms are meeting with lawmakers from both sides of the aisle in Congress.
Kara Calvert, Head of U.S. Policy at Coinbase, emphasized the importance of ensuring that government actions do not undermine the crypto industry, saying, "Everybody wants to make sure that what they’re doing isn’t going to be erased by the government."
Additionally, the crypto industry is seeking collaboration with policymakers on regulations related to non-fungible tokens (NFTs). Coinbase recently launched a media campaign, including advertisements in Washington, and encouraged crypto users to urge their congressional representatives to pass crypto-related legislation.
However, the outcome of these efforts remains uncertain. Mark Hays, Senior Policy Analyst at Americans for Financial Reform and Demand Progress, expressed doubts about whether the industry's grassroots campaign will have a significant political impact.
While the crypto industry pushes for favorable legislation, the Senate's attention is primarily focused on addressing the use of cryptocurrencies in money laundering and terrorist financing. In July, the Senate passed its version of the NDAA, which includes an amendment aimed at increasing scrutiny of anonymous crypto transactions.
Senator Sherrod Brown, Chair of the Senate Banking Committee, has shown little interest in prioritizing the advancement of crypto-friendly bills from the House. He emphasized the need for a framework of rules for cryptocurrencies to protect the economy and consumers, stating, "The last thing we need is for the crypto industry to write their own rulebook — too many Ohioans have been burned by fraud and scams."
Despite the progress of House bills, support in the Senate remains uncertain, particularly as lawmakers prioritize addressing the perceived risks associated with cryptocurrencies.
Coinbase is intensifying its efforts in Ohio, where Senator Sherrod Brown is facing re-election next year. The company is hosting grassroots events to raise awareness of the crypto industry's contributions to the local economy. However, without Senator Brown's support, near-term progress on industry-backed crypto legislation appears unlikely, according to Ian Katz, Managing Director of policy research firm Capital Alpha Partners.
In summary, the crypto industry's push for favorable legislation faces challenges amidst the backdrop of budget negotiations and Senate concerns about crypto's use in illicit activities. While crypto companies are making their voices heard on Capitol Hill, the outcome of their efforts remains uncertain. By fLEXI tEAM