Crypto Industry Increases Lobbying Efforts in Washington
With Blockchain technology becoming more prevalent worldwide, particularly as it relates to cryptocurrencies and initial coin offerings (“ICOs”), regulators continue their struggle to develop appropriate legislation that embodies an ideal balance between regulation and innovation. In an effort to help shape these new regulations and encourage legislation that is favorable to the crypto industry, many crypto leaders have increased their presence in Washington, primarily through lobbying efforts. (Lydia Beyoud, Bloomberg Law). In fact, lobbying efforts increased significantly during 2018 with larger crypto groups spending six-figures per quarter on lobbying alone, and crypto-specific companies filing twice as many lobbying reports in 2018 as 2017. (Id.).
While Congress and other federal lawmakers are still primarily in the information gathering phase, the crypto industries attempt to accelerate the regulatory process through increased lobbying efforts appears to be paying off. (Alex Lielacher, Brave New Coin). The Token Taxonomy Act, for example, was recently introduced to Congress in December 2018. If passed, this Act would provide favorable capital gains treatment for crypto trading and establish that crypto assets and digital tokens are not securities. (Joseph Young, Cointelegraph).
In addition to increasing their lobbying efforts, multiple crypto companies and virtual currency startups have begun banding together to form trade groups and alliances. Such alliances seek to present policymakers with a united voice and primarily focus on encouraging the development of appropriate regulations and investor-friendly tax treatment for cryptocurrencies. (Brian Fung, Washington Post). For example, the Blockchain Association, which is based in Washington D.C., acquired over nineteen members in six months, including several top digital-currency exchanges and crypto-investment firms. The Blockchain Association aims to educate lawmakers and establish itself as the go-to lobbying organization for the crypto industry. It also seeks to develop legislation and regulations capable of protecting consumers and encouraging innovation. (Jeff Engel, Xconomy).
Lawmakers worldwide are faced with the question of how to regulate cryptocurrencies. At the same time, various companies and crypto leaders are banding together in an attempt to influence their country’s legislation and regulations. For example, CryptoUK has actively lobbied the U.K. government and the Russian Association of Cryptocurrency and Blockchain to assist the Russian government in researching, developing, and enacting appropriate cryptocurrency legislation. (Maria Lobanova, Bitcoin Magazine). Blockchain companies in China, India, and Australia have also begun teaming up with financial institutions and banks in an effort to influence the evolving regulations surrounding cryptocurrencies and blockchain technology. (Jimmy Aki, CCN). In the end, while the crypto industry has been increasing its lobbying efforts both in Washington and abroad, with the approach and impact varying between countries, introducing and obtaining approval for favorable cryptocurrency legislation primarily continues to be an uphill battle.