It’s time for crypto in Washington, DC
A regulatory battle is coming and the federal government is barking its teeth in a nasty way. These include the Treasury Department that pushed the Global Financial Action Task Force to pass anti-crypto regulations, and a new round of IRS investigations. Meanwhile, Congress still shows no signs of adopting common sense measures, such as a de minimis tax exemption for crypto transactions under $ 200 – this would make crypto more attractive to consumers.
The situation calls on the crypto industry to push for clear policy proposals, backed by a crack lobby game. Sadly, the industry is rather mired in schisms and infighting – a situation reflected in the sprawling number of trading groups all claiming to speak in favor of crypto.
Just this week, a new lobby group has emerged in Washington, DC. It involves two of the biggest names in the crypto world, Coinbase and the Paradigm hedge fund, and two big hitters in fintech and finance, Fidelity and Square. Together, the companies plan to tout the benefits of digital currency to lawmakers under the banner of a business group called the Crypto Council for Innovation.
At first glance, the arrival of the ICC – and the four rich and influential companies that back it up – seems like good news for the industry. Skeptics, however, say that instead of strengthening the crypto cause, the ICC will fuel the factionalism that has long driven the industry to beat below its weight in Washington.
For those who follow such things, CCI is at least the sixth crypto trading group operating in the nation’s capital. Most prominent of the others are the Blockchain Association – an umbrella group that Coinbase escaped from last summer – and Coin Center, a nonprofit research center.
Then there is the Association for Digital Assets Markets, an organization backed by a former Ripple executive who has so far done little, and the Digital Chamber of Commerce, which has gathered many members, but which reviews deride it as a glorified marketing operation. for heavy companies that want to appear plugged into the blockchain. Also on the list is an operation called the Virtual Commodities Association, started by the Winklevoss twins in 2018, almost dying today.
In theory, more trading groups should mean more lobbying power for the crypto industry. But Washington insiders tell me the opposite is true. They say the arrival of the ICC will make it more difficult for the industry to deliver a unified message to Congress, and that the distribution of lobbying funds among multiple organizations will make it harder for lawmakers to influence.
Blockchain Association allies are also going after Coinbase and Paradigm, accusing them of arrogance and trying to reinvent the rigid rules of politics on Capitol Hill.
People close to CCI don’t see it that way, of course. For their part, they say a new lobby group is needed because existing groups have failed to exert any real influence or change the narrative, popular in Washington, that crypto is little more than a money laundering tool. They also claim that the Blockchain Association made a fatal error in admitting Binance US – a move that allowed the group to pocket a membership fee of $ 250,000. Critics say the move has alarmed lawmakers worried about Binance’s potential ties to China.
Both factions – the upstart ICC and those linked to the Blockchain Association – make good arguments. But that’s a problem because this schism couldn’t come at a worse time for the crypto industry: the U.S. government poses an existential threat to crypto. Industry must present a united front.
Instead, as has happened since 2014, when an advocacy group called the Bitcoin Foundation collapsed amid corruption and infighting, the biggest players in crypto remain unable to work together. .
It doesn’t have to be that way. Just look at Big Tech, where bitter rivals such as Google, Amazon, and Facebook come together under one umbrella to push for policies that support their industry.
“People who are fierce competitors in the market realize that it makes sense to team up,” one Blockchain Association supporter laments to me. “That’s what mature industries do.”
Crypto is not a mature industry, of course, and it may become so over time. For now, however, crypto firms of all kinds are better off finding a way to gain influence in Washington – before the US government undoes much of what they’ve built.
This is Roberts on Crypto, a weekend column by Decrypt editor Daniel Roberts and Decrypt editor Jeff John Roberts. Sign up for the Decrypt email newsletter to receive it later in your inbox. And read last weekend’s column: Why the NFT Boom Is So Like Gaming.