Crypto Industry’s Lobbying Power Grows As Former Officials Change Sides
Crypto firms have been increasingly appointing former regulators and lawmakers in recent months. While the officially stated aim of such appointments is to help crypto industry better understand the regulatory landscape, it’s just as likely that the appointees have been enlisted to help firms lobby government and regulatory authorities more effectively.
But it’s not only former regulators and lawmakers who are joining cryptoasset companies, with former executives from the legacy financial system also jumping on the bandwagon. Together with former officials, these execs are not only helping improve the quality of leadership in crypto, but are also helping crypto to step up its lobbying game.
And according to lobbying data available in the UK, the big companies and trade associations are on course to break their spending records in 2021. This might be good news for the entire industry if we assume that claims by trade associations that they pursue the interest of all participants are true.
Coming to the crypto side
The list of ex-regulator/lawmaker appointments in crypto has been growing pretty steadily in 2021.
According to Fred Charles, a board member of the United Kingdom-based Venture Capital Finance, such cross-sector appointments indicate that the crypto industry is beginning to mature.
“As the market picks up, it will lead to industry leaders, including those who work for regulators, being on the side of new disruptive technologies. Undoubtedly, such leaders can accelerate the process of lobbying and regulatory adaptation,” she said.
Also, other industry participants suggest that most of the above appointments are more about ensuring the fullest possible compliance with existing regulations.
“More likely such appointments have been made from a compliance perspective — to help companies understand and more effectively navigate an ambiguous and ever-evolving legal and regulatory framework,” said Gabriella Kusz, a member of the board of directors of the US-based Global DCA (Global Digital Asset and Cryptocurrency Association). “Identifying and including former regulators and legislators helps to better understand, anticipate and ensure alignment with current and potentially future legal and regulatory requirements for crypto businesses.”
This is a view shared by the Blockchain Association’s Graham Newell. While he agrees that there’s likely some lobbying motive behind at least some of the recent appointments, he also suspects that many of the hires are motivated by a desire to improve leadership and to expand.
“While these hires might help a company better understand the path from idea to policy or new regulatory action, I would assume that the primary attribute that these companies are looking for is whether a new hire can help them grow their core business. Brooks, in particular, has deep experience in crypto, as well as a good understanding of the government’s regulatory machinery following his stint at the [Office of the Comptroller of the Currency],” he said.
Even so, it’s clear from many of the press releases accompanying recent hires that a lobbying motive is very much present. With McDonnell and Nadeu’s appointments, for example, Binance, which is now reportedly being investigated in the US, stated that one of
the main aims was “to support its overall objective to build stronger relations with regulatory and law enforcement bodies worldwide.”
In other words, lobbying. And this assumption is supported by the latest data on lobbying in the US, as compiled by OpenSecrets.org.
If you take a look at Coinbase’s entry in OpenSecrets’ database, you see that it’s on course to spend a record amount on lobbying in 2021. Its lobbying spending has been growing consistently every year since 2017, and even though it has data only for Q1 2021, this shows a noticeable growth over Q1 2020.