Lobbying Expenses Surge for US Crypto Companies in 2023: Report

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The cryptocurrency sector in the United States has reached a new milestone, with lobbying expenses reaching $18.96 million between January and September 2023. This notable increase in spending underscores the industry’s proactive approach to restoring its reputation and promoting a crypto-friendly regulatory environment.

$18.96M Spent on Lobbying in First Three Quarters of 2023

OpenSecrets, a leading non-profit research and money-tracking organization has reported a 19% increase in lobbying expenses within the digital asset industry compared to 2022.

According to a December 5 Reuters report, crypto companies spent $18.96 million on lobbying in the first three quarters of 2023 (January to September), a rise from 2022’s $16.1 million.

Coinbase led the charge in cryptocurrency lobbying efforts by allocating $2.16 million, making it the top spender in this sector.

Other significant contributors to lobbying expenditures included Foris DAX (which operates Crypto.com), the Blockchain Association, and Binance Holdings.

According to the report, Kristin Smith, the CEO of the Blockchain Association, articulated the organization’s objective, stating, “Our goal is to engage directly with policymakers, build relationships, and bridge the education gap to establish a commonsense regulatory framework.”

Remarkably, the significant increase in lobbying spending by US cryptocurrency companies in 2023 occurred despite the notable collapse of FTX, a major contributor to lobbying expenditures in the previous year.

In 2022, various crypto firms, including FTX, collectively directed almost $22 million to lobbying efforts.

Burgeoning Crypto Industry vs. SEC

Cryptocurrency companies are making concerted efforts to enhance their reputation, especially in the aftermath of negative events in the previous year.

These companies are contending with challenges arising from heightened regulatory scrutiny, particularly from the US Securities and Exchange Commission (SEC), which asserts that the industry is violating its regulations.

Lobbying efforts escalated following the SEC’s legal actions against Binance and Coinbase in early June for allegedly trading unregistered securities – a charge vehemently denied by the companies.

Meanwhile, the cryptocurrency industry is actively advocating for the SEC’s potential approval of a spot bitcoin exchange-traded fund (ETF).

This approval would broaden accessibility to Bitcoin, the world’s largest cryptocurrency, among a wider investor audience. Industry optimism increased, especially after the SEC faced a significant legal setback against Grayscale’s investment during the summer.

This optimism contributed to a surge in Bitcoin prices, reaching a new-year high of $44,000.

Source: CoinMarketCap BTC 1-Year Market Data

Furthermore, cryptocurrency companies are engaging with legislative processes, particularly in the House of Representatives, to promote favorable regulations.

In July, the industry achieved a notable victory when a congressional committee in the House passed two major bills: the Digital Consumer Protection Act 2023 and the Lummis-Gillibrand Responsible Financial Innovation Act 2023.

Lobbyists argued that these bills would clarify the application of existing financial rules to cryptocurrency companies, addressing regulatory uncertainties and supporting a more transparent and regulated environment for the industry.

While the legislative bills have not advanced beyond their current stage, crypto lobbyists display persistence and sustained efforts. For instance, Coinbase, a major player in the crypto space, initiated a grassroots advocacy campaign on September 19.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.