Rapid Surge in Lobbying Expenditures by US Cryptocurrency Companies Indicates Shifting Focus on Policy and Regulation
A recent analysis has shed light on a notable spike in lobbying expenses by US cryptocurrency firms, demonstrating a remarkable 1386% increase from 2017 to 2023. Data compiled by Social Capital Markets has revealed that in 2023 alone, cryptocurrency companies collectively invested $40.42 million in lobbying, underscoring the growing importance of fostering relationships with government entities within the sector. Particularly noteworthy is that a significant portion of this surge, totaling $78.94 million, occurred in the last two years, highlighting the intensified efforts to influence policymakers in response to dynamic regulations concerning digital assets.
Leading the charge in cryptocurrency lobbying in 2023 was Apollo Global Management, allocating $7.56 million to this cause and enlisting the support of 104 lobbyists, 78 of whom possessed prior experience in the public sector. Following closely behind was the Managed Funds Association (MFA), with $4.11 million in lobbying expenses and a contingent of 32 lobbyists, 25 of whom had previously served in government roles. Coinbase also notably escalated its lobbying endeavors, with expenditures amounting to $2.86 million in 2023, showcasing an impressive 3475% increase from its lobbying spendings in 2017.
The surge in lobbying activities can be attributed to the pressing need for regulatory clarity within the industry. The current lack of a clearly defined legal framework for digital assets in the US has propelled the cryptocurrency sector to advocate for customized legislation that draws a clear distinction between cryptocurrencies and traditional financial instruments.
Despite the remarkable increase in lobbying efforts, the financial outlay of cryptocurrency firms represents less than 1% of the overall lobbying expenditure in the US, estimated at $4.26 billion in 2023. While cryptocurrency companies are making significant strides in Washington, they still function as relatively minor participants in comparison to more established sectors like healthcare, finance, and energy.
Looking forward to 2024, it is projected that the lobbying spending by cryptocurrency firms will witness a decline, with an anticipated $13 million earmarked for the first half of the year, less than half of the total expenditure in 2023. Of note is the substantial rise in political contributions, with the cryptocurrency industry directing over $119 million towards federal elections in the current year through Political Action Committees (PACs), representing nearly half of all corporate spending in this election cycle.
Coinbase has emerged as a prominent contributor to political donations, channeling $51 million towards this endeavor and supporting both Republican and Democratic PACs such as the Congressional Leadership Fund and Senate Leadership Fund. A significant portion of Coinbase’s donations, totaling $61.5 million, has been allocated to Fairshake PAC, known for endorsing candidates supportive of the cryptocurrency industry and opposing those perceived as antagonistic.
In conclusion, the upsurge in lobbying endeavors among US cryptocurrency companies underscores the industry’s commitment to shaping policies and regulations in a swiftly changing environment, underscoring the crucial necessity for regulatory certainty and tailored legislation to facilitate the growth and advancement of the sector.
