Crypto has revolutionized the world of finance, offering a new way of thinking about wealth and investment opportunities. Despite the gains made in the digital currency space, legislative and regulatory authorities are ever-present in the background, and the potential impact of their decisions cannot be underestimated. The impact of crypto on the world of finance is not fully acknowledged, despite its trillion-dollar market cap. That’s why the crypto industry must work hard to make its voice heard in the political sphere. Traditional Finance (TradFi) giants’ spending power poses a challenge for the crypto industry in the lobbying arena.
Lobbying in Other Industries
Federal lobbying in the first quarter has exceeded $1 billion for the second consecutive year, as reported by Open Secrets. The involvement of familiar players such as healthcare, finance, real estate, and energy industries is not surprising.
Despite regulatory challenges, the cryptocurrency industry spent only $21.6 million on lobbying, according to Open Secrets data. In comparison, big pharma spent $375.2 million in 2022, while the automotive industry spent $82 million, and commercial banks paid $64.6 million to lobbyists that year.
Reports shed light on the influence of TradFi Goliaths
The crypto industry’s political contributions to election campaigns have grown significantly, reaching $2.3 million in 2022. Coinbase alone spent $3.4 million on lobbying. The increased spending by the crypto industry demonstrates its growing influence and commitment to influencing decisions.
Open Secrets’ first-quarter lobbying spending report sheds light on the influence of TradFi Goliaths. Tether, one of the largest stablecoins, has spent $270,000 lobbying in the first quarter of 2023, which may not seem like much on the face of it but is a massive jump over its first quarter of 2022 spending of $100,000.
Importance of Effective Lobbying
The Blockchain Association‘s lobbying budget increased to $490,000 this quarter from $460,000 last year. Stablecoin issuer Paxos also saw their lobbying expenditure jump, from $50,000 in Q1 2022 to $80,000 this past quarter.
In comparison, the American Bankers Association dropped $2 million this past quarter alone, while Citigroup spent $1.4 million. These figures demonstrate the significant challenge that crypto faces in getting its message heard, but it is not insurmountable.
At the end of the day, as long as businesses keep innovating and investors keep buying into the crypto space, there will be a steady demand for timely regulatory action. But success in crypto lobbying requires the responsible use of legislative resources and a willingness to learn from the big players on the field.
Without proper action, the ball may remain trapped at the bottom of the hill.
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