As US regulators step up oversight of the digital asset space, crypto firms are doubling down on lobbying efforts.
According to a recent study by crypto intelligence site Crypto Head.
Crypto lobbying spending was $9.6 million from 2017 to 2021 and is expected to exceed $15 million by the end of 2022, according to the study.
“I think we’re going to see a lot more lobbying, especially when bills come forward,” said Christopher W. Gerold, a partner at the law firm Lowenstein Sandler and former head of the New Jersey Bureau of Securities, to MarketWatch in a telephone interview.
“When we see bigger and broader legislation introduced, we will see money pouring into the crypto company lobbying space, and rightly so. If the wrong legislation is passed, it could put some companies out of business,” Gerold said. “It’s really a hyper-technical area, as regulators are defining different entities and protocols in the digital asset space.”
Crypto firms are pushing for a friendlier regulatory environment, with the Biden administration apparently aiming February at issue an executive order that establishes a government-wide strategy for digital assets, Bloomberg reported last month, citing people familiar with the matter.
Meanwhile, the United States Securities and Exchange Commission on Tuesday, in an unprecedented actionsnatched a $100 million fine from BlockFi Loans, including for not registering its crypto lending products.
In addition, a trillion-dollar infrastructure bill was signed into law in November. It contains a provision that would require digital asset brokers to record and report transactions to the Internal Revenue Service starting in 2023.
Who did the most lobbying?
with 30% of transaction revenue from crypto trading in 2021, spent the most on lobbying among crypto-related businesses, with $1.35 million paid during the year, according to the Crypto Head report. However, it is unclear how much of the total relates specifically to crypto.
A public filing from February 2021 showed that Robinhood aimed to influence Washington on issues, including Democratic bills that would introduce a Financial Transaction Tax (FTT), as well as Republican legislation that would prohibit states from imposing an FTT to retail investors, as the brokerage added two in-house lobbyists a year ago.
Blockchain firm Ripple spent $900,000 on lobbying in 2021, according to the Crypto Head report, while crypto exchange Coinbase contributed $785,000.
A lawsuit filed by the SEC against Ripple Labs Inc. near the end of the Trump administration claimed the platform violated investor protection laws, but it remains unresolved. Regulator says Ripple failed to register XRP cryptocurrency XRPUSD,
it was launched as a security offering, while the company argued that the crypto is used for international payments and is outside the jurisdiction of the SEC.
Meanwhile, Coinbase COIN,
dropped its proposed crypto lending product after receiving a legal threat from the SEC. Regulators are also paying increasing attention to stablecoins, including USDC, which was jointly developed by Coinbase and Circle.
Meanwhile, Binance spent $20,000 on lobbying in 2021, ranking 12th in Crypto Head’s study. The second examine the relationship between US branches of the crypto exchange and two trading companies linked to Binance founder Changpeng Zhao, The Wall Street Journal reported, citing people familiar with the matter.
Still, overall spending by crypto companies on lobbying has been eclipsed by some of the biggest groups and companies in the US industry. The United States Chamber of Commerce, the nation’s largest lobby group, spent a total of $66.4 million on lobbying in 2021, according to research organization Open Secrets.
Tech giant Amazon.com AMZN,
poured $20.6 million into lobbying, while Meta FB,
paid $20.1 million for such efforts.