In the world of cryptocurrency, lobbying has become increasingly important as regulators around the globe seek to establish rules and regulations for this emerging asset class. In recent months, there have been a number of developments in the space, including the rise of FOMO (fear of missing out) ads and efforts to establish merger control rules to prevent consolidation in the industry.
One of the most notable trends in crypto lobbying has been the use of FOMO ads. These ads are designed to appeal to investors’ fears of missing out on the next big thing in cryptocurrency, painting a picture of rapid growth and massive potential gains. While regulators have expressed concern about the potential for these ads to mislead investors, those in the industry argue that they are a necessary tool for raising awareness and attracting new investment.
In the United States, the Commodity Futures Trading Commission (CFTC) has taken steps to crack down on FOMO ads that it believes are misleading. The agency issued an advisory in May 2021 warning investors to be wary of ads that promise quick and easy profits, and launched a new website called SmartCheck to help investors check the credentials of individuals and firms offering cryptocurrency investments.
Other countries have taken a different approach. In the United Kingdom, for example, regulators have opted for a more permissive approach toward FOMO ads. The Financial Conduct Authority (FCA) has said that it believes the ads can be helpful in drawing attention to new investment opportunities, as long as they are not misleading or fraudulent.
Another area of focus for crypto lobbyists has been the establishment of merger control rules. As the cryptocurrency industry has grown, there has been concern about the potential for consolidation, which could limit competition and drive up prices. Some industry observers have pointed to the example of the tech industry, where a handful of large firms dominate the market and smaller players struggle to compete.
To address these concerns, some regulators have proposed merger control rules for the cryptocurrency industry. In the European Union, for example, the European Commission has proposed a new Digital Markets Act that would give regulators the ability to block mergers and acquisitions that could be harmful to competition.
The proposal has drawn criticism from some in the industry, who argue that it could stifle innovation and investment in the space. Others, however, see it as a necessary measure to prevent the concentration of power in the hands of a small number of players.
In the United States, there has been less of a concerted effort to establish merger control rules for cryptocurrency. However, the issue has been raised in a number of high-profile cases. In March 2021, for example, the U.S. Department of Justice blocked a proposed merger between two cryptocurrency mining firms, citing concerns about potential anticompetitive effects.
As the crypto industry continues to grow and mature, it is likely that lobbying efforts will become increasingly important. With regulators around the world grappling with how to govern this new asset class, those in the industry will need to make their voices heard if they want to shape the rules of the road. In the years ahead, we can expect to see even more debate and discussion over issues like FOMO ads and merger control as the cryptocurrency ecosystem evolves.
In this week’s Influence newsletter, Bjarke Smith-Meyer discusses the surge in lobbying efforts by the crypto industry, despite a heavy downturn in the market last year. The spending spree was led by U.S. exchange Coinbase, which hired 32 new lobbyists and spent $3.3 million on lobbying in the U.S., followed by the Blockchain Association with $1.9 million. The industry has also perfected a marketing strategy that capitalizes on people’s fear of missing out, deliberately producing vague advertisements that make little reference to their products or services. Financial regulators are struggling to police such advertising, but EU legislators agreed on a rulebook for crypto last year that will require new guidelines on how foreign firms can service EU investors. The paper also highlights the small world of competition economists who are frequently called upon to analyze markets and show the potential effects of a deal, leading to an increase in economic submissions that exploit regulators’ finite administrative capacities. The paper suggests that consultancies’ conduct should be regulated, including a professional code and monitoring system. The EU Ombudsman also called for more transparency on the role of external experts who give the green light to projects under the €8 billion European Defence Fund, as their names are nowhere to be found in conflict of interest checks.