When federal regulators late last year accused one of the worlds most popular cryptocurrency platforms of illegally selling $1.38 billion worth of digital money to investors, it was a pivotal moment in efforts to crack down on a fast-growing market and in the still-nascent industrys willingness to dive deeply into the Washington influence game.
The company, Ripple Labs, has enlisted lobbyists, lawyers and other well-connected advocates to make its case to the Securities and Exchange Commission and beyond in one of the first big legal battles over what limits and requirements the government should set for trading and using digital currency.
Ripple has hired two lobbying firms in the past three months. It has retained a consulting firm staffed with former aides to both Hillary Clinton and former President Donald J. Trump to help it develop strategy in Washington. And to defend itself against the S.E.C., it hired Mary Jo White, a former chairwoman of the commission during the Obama administration.
Ripple is just one of a long list of cryptocurrency companies scrambling for influence in Washington as the Biden administration begins setting policy that could shape the course of a potentially revolutionary industry that is rapidly moving into the mainstream and drawing intensifying attention from financial regulators, law enforcement officials and lawmakers.
There is a tectonic shift underway, Perianne Boring, the president of the Chamber of Digital Commerce, a cryptocurrency lobbying group, told other industry lobbyists, executives and two House lawmakers who serve as industry champions, during a virtual gathering last month. If we dont start planning and taking action soon, we have everything to risk.
So far, cryptocurrency has been a highly volatile investment, but it is already starting to alter the way individuals, companies and even some central banks do business. Firms like Ripple, which is based in San Francisco, run cryptocurrency platforms that allow customers to make nearly instant global payments through a system that operates largely outside government monetary networks.
Globally, the value of all outstanding cryptocurrency has jumped to about $2.4 trillion or more than the approximately $1.2 trillion of United States currency in circulation worldwide from about $200 billion two years ago. This is from an industry that was born only a dozen years ago, when the first cryptocurrency, Bitcoin, was introduced.
As the stakes have grown, so has the recognition that the industrys future at least in the United States will be shaped in Washington, prompting the rush to scoop up well-connected advocates.
The board of advisers at the digital chamber is stuffed with former federal regulators, including a former member of Congress and a recent chairman of the Commodity Futures Trading Commission, J. Christopher Giancarlo, who was named to the board of BlockFi, a financial services company that tries to link cryptocurrencies with traditional wealth managers.
Max Baucus, the Democratic former chairman of the Senate Finance Committee, and Jim Messina, a former top Obama adviser, also have recently been named to senior industry posts.
Lobbying disclosure records show that at least 65 contracts as of early 2021 addressed industry matters such as digital currency, cryptocurrency or blockchain, up from about 20 in 2019. Some of the biggest spenders on lobbying include Ripple, Coinbase the largest cryptocurrency exchange in the United States and trade groups like the Blockchain Association.
The lobbying burst is one of several recent signs nationwide that the industry is becoming a bigger presence in the economy. FTX, the cryptocurrency trading firm, is spending $135 million to secure the naming rights to the home arena of the Miami Heat.
The billionaire Elon Musk, who hosted Saturday Night Live this weekend, was asked about Dogecoin, a cryptocurrency featuring the face of a Shiba Inu dog that was created as a joke but has recently surged in value. Its the future of currency. Its an unstoppable financial vehicle thats going to take over the world, Mr. Musk said, before adding, Yeah, its a hustle. The price of Dogecoin plunged nearly 35 percent in the hours after the show aired.
With the industrys hires of recent government officials, claims of conflicts of interest are already starting to emerge.
Jay Clayton, who was the S.E.C. chairman until December, is now a paid adviser to the hedge fund One River Digital Asset Management, which invests hundreds of millions in Bitcoin and Ether, two cryptocurrencies, for its clients. Mr. Clayton declined to comment.
The day before Mr. Clayton resigned from the S.E.C., the agency filed a lawsuit against Ripple Labs, which competes with Bitcoin, alleging that the company had improperly raised $1.3 billion from investors through what the agency claimed was effectively an illegal stock offering.
Binance.US, which runs a cryptocurrency exchange, this month hired as its chief executive Brian P. Brooks, who until January served as the acting head of the Office of Comptroller of the Currency, which helps regulate banks. The day before he stepped down, the agency granted a conditional charter to Anchorage Digital Bank, making it the countrys first national cryptocurrency bank. A spokeswoman for Mr. Brooks said Binance was not a bank, so there was no conflict.
Ripples new lobbying firms include one that was recently set up by K. Michael Conaway, a Republican who until this year served as a House member from Texas and helped push pro-cryptocurrency legislation last year. Mr. Conaway is banned from lobbying his former colleagues for a year.
So Ripple has enlisted Mr. Conaways former chief of staff, who is also a partner at the lobbying firm but is no longer subject to the revolving-door ban, to lobby on bills pending in Congress.
Among the other firms working for Ripple is Teneo led by Declan Kelly, a former aide to Mrs. Clinton which has assigned Tony Sayegh, a senior Treasury Department official during the Trump administration, to help shape its communications strategy in Washington.
So far, the industry has not become a big player in campaign contributions, although there are major exceptions, like Sam Bankman-Fried, the 29-year-old billionaire founder of FTX, who donated $5 million in October to a political action committee that backed President Biden. (Mr. Bankman-Fried said in an interview that his donation was not an attempt to influence industry regulation, but that he does want to participate in the discussion.)
The cryptocurrency industry has a long list of lobbying goals, detailed in an eight-page letter sent to Mr. Biden in March that called for the government to settle on a clear set of policies with a light-touch regulatory approach.
The regulatory questions relate to at least two key parts of the cryptocurrency industry: so-called tokens, which are the currencies themselves, like Bitcoin, and platforms like Ripple that allow rapid money transfers with these cryptocurrencies, or the buying and selling of them, like Coinbase.
But considerable tension remains over existing federal rules, with public sparring among rival companies like Coinbase and Binance, a sign of how hard it will be to reach consensus on any new regulations.
Industry leaders are at least somewhat hopeful that it will have more support from the Biden administration than it did from the Trump administration, pointing out, for example, that Gary Gensler, the new S.E.C. chairman, taught courses about blockchain technology at M.I.T.
At his confirmation hearing in March, Mr. Gensler said cryptocurrencies had brought new thinking to the world of payments and financial inclusion. However, he indicated that he would strike a balance between encouraging new financial technology to flourish and protecting investors.
The cryptocurrency industry is less optimistic about Treasury Secretary Janet L. Yellen, who expressed deep concern this year about Bitcoin.
It is a highly speculative asset, and I think people should beware, it can be extremely volatile, Ms. Yellen said at a New York Times DealBook event in February. And I do worry about potential losses that investors in it could suffer.
One sign of the industrys growing clout in Washington came during the closing days of the Trump administration, when the Treasury Department proposed a rule to curb the use of cryptocurrencies for money laundering by requiring companies handling certain transactions over $3,000 to know the names and addresses of the customer and the recipient.
Even before Treasury Secretary Steven Mnuchin announced the proposed rule in December, he was targeted in industry appeals to delay or abandon the idea.
In the early days of the internet, there were people who called for it to be regulated like the phone companies, Brian Armstrong, the chief executive of Coinbase, wrote on Twitter in November, adding that he had sent a letter to Treasury to object. Thank goodness they didnt.
Thousands of such comments have been sent to Treasury.
Among those raising concerns was Sigal Mandelker, who until late 2019 was the top Treasury official overseeing the financial crimes agency that proposed the tighter rule, after her departure. She now works for Ribbit Capital, which is an investor in Coinbase and other cryptocurrency industry players and joined the chorus objecting to Treasurys plan. Ms. Mandelker did not respond to a request for comment.
Mr. Mnuchin backed down and pushed off final action to the Biden administration, which has extended the comment period and is considering how to proceed.
The Ripple enforcement case brought by the S.E.C. in December centers on whether a digital asset the company sold, called XRP, should be defined as a security or a commodity, a major distinction in terms of regulation.
Ripple asserts that XRP is effectively a currency, and like any currency or commodity can be bought and sold without S.E.C. intervention. But the agency argues that each sale of XRP is like a stock or bond trade, meaning a buyer is effectively acquiring a stake in Ripple when purchasing the asset. As a result, the S.E.C. argues that Ripple should have registered with the agency and provided extensive public disclosures like those required with stock or bond offerings.
Ripple, which in 2019 became one of the first cryptocurrency companies to open a lobbying office in Washington, has aggressively pushed back, successfully asking a federal judge to force the S.E.C. to turn over what the agency considers confidential internal documents.
Stuart Alderoty, Ripples general counsel, said that in the absence of clear cryptocurrency rules, the federal government was effectively creating regulatory policy via enforcement, an approach that is confusing and harmful to investors and the industry.
If you have a responsible player in the industry, they are going to be engaging with policymakers, he said.
The S.E.C. case against Ripple has helped persuade industry players on the sidelines to get involved.
The industry needs to accept that good legislation and regulation is what is required, not no regulation, said John E. Deaton, a lawyer who has moved to intervene in the enforcement action against Ripple. Because right now it is like the Wild, Wild West, and you have different federal agencies fighting over which one has jurisdiction.
The House this month passed a bill backed by industry lobbyists to create a working group of federal regulators, industry executives, investor protection groups and others to examine possible frameworks for a regulatory system.
We need to get the big prize done, Representative Darren Soto, Democrat of Florida and a member of the Congressional Blockchain Caucus, a group of lawmakers working with the industry to help promote cryptocurrencies, told the industry conference last month. Which is the statutes and jurisdiction and definitions to create that certainty, to really let blockchain and cryptocurrency flow and improve in the United States.
More:
As scrutiny of cryptocurrency grows, industry turns to Washington lobbyists - Business Standard
- Bitcoin Just Did Something It Has Only Done 3 Times Before. The Cryptocurrency Usually Does This Next. - The Motley Fool - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency Market News: Bitcoin Halving Steadies Price, Network Transaction Fees Spike - Investopedia - April 25th, 2024 [April 25th, 2024]
- Bitcoin Just Did Something It Has Only Done 3 Times Before. The Cryptocurrency Usually Does This Next. - Yahoo Finance - April 25th, 2024 [April 25th, 2024]
- 10 Best Cryptocurrencies To Buy In April 2024 - Forbes - April 25th, 2024 [April 25th, 2024]
- Movement Labs raises $38 million to build layer 2 blockchain on Ethereum with Facebook tech - Fortune - April 25th, 2024 [April 25th, 2024]
- Cardano Founder Charles Hoskinson Reiterates Core Purpose of Cryptocurrency Here's What You Need to Know - Cryptonews - April 25th, 2024 [April 25th, 2024]
- From Cryptocurrency to Cannabis: 7 Penny Stocks on the Rise - InvestorPlace - April 25th, 2024 [April 25th, 2024]
- South Carolina: Cryptocurrency scams on the rise in Upstate - WYFF4 Greenville - April 25th, 2024 [April 25th, 2024]
- Binance BNB Memecoin Traders Join 100X New Cryptocurrency On Uniswap - Yahoo Finance - April 25th, 2024 [April 25th, 2024]
- The Future of Real Estate: Investing in Tokenized Properties with Cryptocurrency - ForexLive - April 25th, 2024 [April 25th, 2024]
- The Current Position with Cryptocurrency Regulation in the United States - Latest Cryptocurrency Prices & Articles - April 25th, 2024 [April 25th, 2024]
- 3 Must-Know Facts About Ethereum, Before You Buy the Cryptocurrency - The Motley Fool - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency: 3 Meme Coins To Watch In May for Exponential Gains - Watcher Guru - April 25th, 2024 [April 25th, 2024]
- EOS Falls 14% In Bearish Trade By Investing.com - Investing.com - April 25th, 2024 [April 25th, 2024]
- The UItimate Cryptocurrency to Buy With $1,000 Today - The Motley Fool - April 25th, 2024 [April 25th, 2024]
- Romance scams involving AI images, cryptocurrency on the rise in Chicago - CBS Chicago - April 25th, 2024 [April 25th, 2024]
- Bitcoin Halving Event Of 2024: The Aftermath Forbes Advisor Australia - Forbes - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency Ethereum Classic Down More Than 4% Within 24 hours - Benzinga - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency: Top 3 Coins To Buy Now For 10X Gains In 2024 - Watcher Guru - April 25th, 2024 [April 25th, 2024]
- What's going to be different with the halving of Bitcoin this time? - Euronews - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency OKB Decreases More Than 3% Within 24 hours - Benzinga - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency OKB Decreases More Than 3% Within 24 hours - Investing.com UK - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency Kaspa Falls More Than 3% In 24 hours - Benzinga - April 25th, 2024 [April 25th, 2024]
- BRICS To Replace US Dollar With Cryptocurrency for Trade - Watcher Guru - April 25th, 2024 [April 25th, 2024]
- Bitcoin Halving Sparks Unprecedented Transformation in Cryptocurrency Market - West Island Blog - April 25th, 2024 [April 25th, 2024]
- Influential Analyst on YouTube Shares High-Potential Cryptocurrency That Could Beat Shiba Inu (SHIB) and Dogecoin (DOGE) Gains in This Bull Run -... - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency Uniswap Up More Than 3% In 24 hours By Benzinga - Investing.com UK - April 25th, 2024 [April 25th, 2024]
- Bitcoin is halving again what does that mean for the cryptocurrency and the market? - The Conversation - April 25th, 2024 [April 25th, 2024]
- Cryptocurrency Ethereum Classic Down More Than 4% Within 24 hours By Benzinga - Investing.com UK - April 25th, 2024 [April 25th, 2024]
- RackNerd Expands Cryptocurrency Payment Options with Coinify Integration, Accepting Over 30 Cryptocurrencies - PR Web - April 25th, 2024 [April 25th, 2024]
- What Meltdown? Crypto Comes Roaring Back in the Philippines. - The New York Times - March 18th, 2024 [March 18th, 2024]
- Chinas cryptocurrency investors made gains of US$1 billion in 2023 - South China Morning Post - March 18th, 2024 [March 18th, 2024]
- 1 Super Cryptocurrency Could Soar to $200,000 by 2025, According to a Wall Street Analyst - The Motley Fool - March 18th, 2024 [March 18th, 2024]
- Cryptocurrency Miners Need to Report their Energy Use - Earthjustice - March 18th, 2024 [March 18th, 2024]
- Understanding the Fundamental Differences Between Cryptocurrency and Fiat Currency - FinSMEs - March 18th, 2024 [March 18th, 2024]
- SOL Flips BNB, Becoming 4th Largest Cryptocurrency as Ethereum Becomes Next Target - CCN.com - March 18th, 2024 [March 18th, 2024]
- Prosecutors seek from 40 to 50 years in prison for Sam Bankman-Fried for cryptocurrency fraud - The Associated Press - March 18th, 2024 [March 18th, 2024]
- Cryptocurrency: 3 Meme Coins That Could 15x This Bull Season - Watcher Guru - March 18th, 2024 [March 18th, 2024]
- Can the Bitcoin surge push India to overcome its cryptocurrency hurdles? - The National - March 18th, 2024 [March 18th, 2024]
- The Ultimate Cryptocurrency to Buy With $1,000 Today - Yahoo Finance - March 18th, 2024 [March 18th, 2024]
- Cryptocurrency laundryman gets hung out to dry - The Register - March 18th, 2024 [March 18th, 2024]
- Bitcoin price predictions: How much more could it rise in 2024? - Euronews - March 18th, 2024 [March 18th, 2024]
- Shiba Inu Is Skyrocketing: Is It a Top Cryptocurrency to Buy Right Now? - Yahoo Finance - March 18th, 2024 [March 18th, 2024]
- 1 Top Cryptocurrency to Buy Before It Soars 1,328%, According to Cathie Wood of Ark Invest - The Motley Fool - March 18th, 2024 [March 18th, 2024]
- The other Bitcoin rally: How scams are cashing in on the cryptocurrency fever - EL PAS USA - March 18th, 2024 [March 18th, 2024]
- Kalshi Prediction Market To Introduce Cryptocurrency Betting (Payouts In USD) - Blockchain Magazine - March 18th, 2024 [March 18th, 2024]
- Bitcoin Hits Record $72,000, Emboldening Crypto Industry - The New York Times - March 18th, 2024 [March 18th, 2024]
- Solana (SOL) Flips BNB to Become 4th Largest Cryptocurrency - Watcher Guru - March 18th, 2024 [March 18th, 2024]
- Predicting which Cryptocurrency will Boom in 2024 - ForexLive - March 18th, 2024 [March 18th, 2024]
- Nigeria's Cryptocurrency Crackdown Will Have Consequences, Experts Say - Voice of America - VOA News - March 18th, 2024 [March 18th, 2024]
- Crypto ETN providers head for UK but urge rethink on retail ban - Financial Times - March 18th, 2024 [March 18th, 2024]
- Trump Signals Positive Stance on Cryptocurrency If Elected to the White House - Yahoo Finance - March 18th, 2024 [March 18th, 2024]
- Bitcoin Bulls vs. Bubble Bears: A Cryptocurrency Clash - Crypto Times - March 18th, 2024 [March 18th, 2024]
- Imprison crypto fraudster Bankman-Fried 40 to 50 years, say feds - New York Daily News - March 18th, 2024 [March 18th, 2024]
- Is This The Best Cryptocurrency to Buy With $1,000? - Analytics Insight - March 18th, 2024 [March 18th, 2024]
- How Immortalboost.com Connects Gamers and Cryptocurrency - TheXboxHub - March 18th, 2024 [March 18th, 2024]
- Avalanche (AVAX) Created Millionaires, Here's The New A.I Exchange Cryptocurrency Predicted Huge Gains In 2024 - Analytics Insight - March 18th, 2024 [March 18th, 2024]
- Solana volume leapfrogs Ethereum as memecoin frenzy seen sending price to $415 - DLNews - March 18th, 2024 [March 18th, 2024]
- Bitcoin alternatives, from Ether to Dogecoin - Quartz - March 18th, 2024 [March 18th, 2024]
- Cryptocurrency Price on March 12: Bitcoin trades near $72,000; Toncoin, Avalanche jump up to 34% - The Economic Times - March 18th, 2024 [March 18th, 2024]
- Cryptocurrency: 3 Coins To Watch Under $1 as Bitcoin Hits $56,000 - Watcher Guru - February 27th, 2024 [February 27th, 2024]
- The Ultimate Cryptocurrency to Buy With $1,000 Today - The Motley Fool - February 27th, 2024 [February 27th, 2024]
- The vast Ponzi scheme that is cryptocurrency - The Pasadena Star-News - February 27th, 2024 [February 27th, 2024]
- Exploring the World of Global Cryptocurrency Exchanges - Indiana Daily Student - February 27th, 2024 [February 27th, 2024]
- Cryptocurrency Prices And News: Bitcoin Price Hits 27-Month High Above $57000 - Investor's Business Daily - February 27th, 2024 [February 27th, 2024]
- 7 Best Cryptocurrency Investing Strategies | Investing | U.S. News - U.S News & World Report Money - February 27th, 2024 [February 27th, 2024]
- Cryptocurrency fraud costs: $1.56 billion in 2023 - Accounting Today - February 27th, 2024 [February 27th, 2024]
- Expanding Horizons: WDC Quantify's 2024 Plan to Revolutionize Cryptocurrency Trading and Investment - Morningstar - February 27th, 2024 [February 27th, 2024]
- BC Court Upholds Temporary Freeze on Cryptocurrency Mining Connections to BC Hydro Grid - BlockTribune - February 27th, 2024 [February 27th, 2024]
- Texas Blockchain Council and Riot Platforms Win Temporary Restraining Order Against DoE Cryptocurrency Mining ... - BlockTribune - February 27th, 2024 [February 27th, 2024]
- Bitcoin price passes $57,000 to hit 2-year high - Quartz - February 27th, 2024 [February 27th, 2024]
- More from Fed's Schmid: Would be a mistake to consider cryptocurrency as a currency - ForexLive - February 27th, 2024 [February 27th, 2024]
- 1 Top Cryptocurrency to Buy Before It Soars 4,500%, According to Cathie Wood's Ark Invest - The Motley Fool - February 27th, 2024 [February 27th, 2024]
- Cryptocurrency: 3 Coins That Could Surge in March - Watcher Guru - February 27th, 2024 [February 27th, 2024]
- Blockchain Unveiled: Beyond Cryptocurrency Lies a World of Opportunity - AutoGPT Official - AutoGPT - February 27th, 2024 [February 27th, 2024]
- Updated Bitcoin prices outlook for 2024 By Investing.com - Investing.com - February 27th, 2024 [February 27th, 2024]
- Suspicious Activity Surrounds BitForex Cryptocurrency Exchange The Merkle News - The Merkle Hash - February 27th, 2024 [February 27th, 2024]
- Donald Trump's Cryptocurrency Portfolio Tops $5M, Thanks to $2.9M in Trump-Branded Tokens Bitcoin News - Bitcoin.com News - February 27th, 2024 [February 27th, 2024]
- Matthew Perry's X account hacked and soliciting cryptocurrency donations through fraudulent site - MSN - February 27th, 2024 [February 27th, 2024]
- Bitcoin: Here's why the flagship cryptocurrency keeps soaring - Cointribune EN - February 27th, 2024 [February 27th, 2024]