Crypto companies’ lobbying spending has risen in recent years as the cryptocurrency industry continues gaining momentum. Such a surge in adoption has attracted more attention from lawmakers and regulators.
Lobbying is the act of attempting to influence decisions made by government officials, often through the use of financial contributions or other incentives. Many companies, including those in the crypto industry, lobby to try to shape regulations and laws in their favor. Per BeInCrypto’s report last year, spending on lobbying for cryptocurrencies had more than quadrupled over the past four years.
One reason for the increase in lobbying spend by crypto companies is the growing regulatory scrutiny of the industry. Cryptocurrencies are a relatively new and complex technology; regulators are still trying to figure out how to regulate them properly. As a result, crypto companies are increasingly seeking to influence the regulatory process to ensure that any new regulations are favorable to their business interests.
Another factor driving the increase in lobbying spend by crypto companies is the growing mainstream acceptance of cryptocurrencies. As more and more companies and individuals adopt cryptocurrencies, the industry is becoming more influential and powerful. Companies are seeking to leverage that power to shape public policy.
2022 Saw a Rise in Lobbying Trend
Renowned entities within the crypto sector have participated in the said activity. In 2022 alone, famed crypto companies made lobbying contributions of up to $25.57 billion to influence policies in their favor. The Money Mongers team shared similar insights with BeInCrypto over the mail.
Not so surprisingly, last year accounted for half of the total lobbying spending by crypto companies. The previous six years totaled $50.75 million, of which $25.57 million was spent in 2022. The second largest exchange by trading volume, Coinbase, spent $3.30 million, making it the highest spender in crypto lobbying expenditure. The screenshot below shares the expense segregation for the said company.
Coinbase’s 2022 expenses based on its lobbying activity Source: The MoneyMongers
It’s important to note that it is common practice amongst people working in the public sector, including congressional staff, to take jobs with lobbying companies, as they understand the inner workings of the sectors they used to oversee. These people are called “revolvers,” and the ones that make the opposite switch (from lobbying companies to public office) are called “reverse revolvers.”
Other Companies That Made It in the Top 10
Blockchain Association occupies the next spot with $1.90 million, followed by Robinhood with $1.84 million. Here’s a list of the expenses for different companies last year. It is worth considering that the expenditure listed below is for the companies involved with crypto. Not the lobbying spent on crypto, or about crypto specifically.
Crypto Lobbying expenditure in 2022 Source: The MoneyMongers
Other key highlights show that Binance’s US subsidiary outlay skyrocketed from $160,000 (2021) to $960,000 (2022), showing a 500% increase. Meanwhile, FTX.US witnessed a growth of 1340% in lobbying expenditure from $50,000 (2021) to $720,000 (2022).
Indeed, given the headwinds last year, crypto companies have struggled to maintain their footing. In some cases, a few companies saw the exit gate following the crypto contagion effect. But such practices have been ongoing for years – the report shared draws a parallel going back to 2017.
Lobbying Expenses in the Last Six Years
Companies have been long-time proponents of lobbying campaigns and have spent the most on lobbying as a whole. In the past six years, lobbying expenditures surged from $2.50 million in 2017 to $25.57 million in 2022. This represents a massive 922% hike, as evident in the graph below.
Lobbying expenditure trend since 2017 Source: The MoneyMongers
Notably, the jump from 2021 expenses to 2022 has been significant, accounting for more than a 120% surge. Deep diving into specific institutions that aided the hike, the table looks like the following:
Company-wise segregation of lobbying expenditure Source: The MoneyMongers
Speaking to BeInCrypto, the team at MoneyMonger stated:
“It only makes sense that companies that stand to profit from crypto lobbying will spend a considerable amount of money to ensure that crypto-friendly laws are passed as soon as possible. For this reason, the expenditure on crypto lobbying has grown manifold over the last half a decade.”
CME Group is Leading the Race
The CME Group, which operates the Chicago Mercantile Exchange, has spent the most on lobbying-related activities since 2017 for several reasons. First, the financial industry is heavily regulated, and the CME Group is a major player in the derivatives market. As such, the company has a significant interest in influencing regulatory decisions that affect its business. Lobbying allows the CME Group to directly advocate for its interests with lawmakers, regulators, and key decision-makers.
Second, the CME Group has faced several regulatory challenges recently, including efforts to increase transparency in the derivatives market and proposals to limit speculation. As a result, the company has had to expend significant resources to defend its position and advocate for more favorable policies for its business.
Third, the CME Group is a large and profitable company with significant resources to invest in lobbying and other advocacy efforts. The company has consistently been one of the best exchanges in the world, and it has the financial resources to support a robust lobbying operation. Overall, the CME Group’s significant investment in lobbying-related activities is driven by interests to influence regulatory decisions impacting its business. With the need to defend its position against regulatory challenges and other threats.
Some Thoughts to Consider
While a significant chunk of money has been spent, it doesn’t always guarantee results. Lobbying can come into play from different sides, not just specific to crypto.
However, there are concerns that the increase in lobbying spend by crypto companies could lead to undue influence on the regulatory process. Public interests need to be adequately represented. It is important for lawmakers and regulators to carefully consider the potential impacts of new regulations on the crypto industry and the broader public to ensure decisions are made in the best interests of all stakeholders.
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