As the cryptocurrency industry continues to gain mainstream recognition, regulatory scrutiny has become a necessary component for its advancement and acceptance into traditional financial systems. In an effort to navigate the complex legal landscape, some of the industry’s biggest players are teaming up and heading back to Washington to lobby for clearer regulations.
Executives from crypto exchange Coinbase, research firm Messari, and blockchain analytics company Chainalysis are joining together to form the Crypto Council for Innovation (CCI). This council aims to educate policymakers and advocate for the development of crypto-friendly policies, as well as push back against policies that could potentially harm the industry.
The timing of CCI’s launch could not be more relevant, as the cryptocurrency market has experienced explosive growth over the last year, reaching a market cap of over $2 trillion. This rapid growth has raised concerns among regulators and lawmakers, who are now tasking themselves with understanding the complexities of a decentralized financial system in which standard regulatory parameters do not apply.
The CCI recognizes the importance of Congressional support to drive the industry forward. By engaging with policymakers, they hope to build an understanding of how this new technology works and demonstrate its potential economic benefits. “Crypto is at a critical juncture,” said Coinbase CEO Brian Armstrong. “It has reached a point where it has become mainstream. It is at a tipping point where it can go much bigger or smaller and it could go in the wrong direction if we don’t provide clarity to regulators, policymakers, and the public.”
Coinbase will be represented on the council by former Securities and Exchange Commission (SEC) executive Brett Redfearn, who recently joined the company as Vice President of Product at Coinbase. Redfearn’s experience in the regulatory field will be a valuable asset for the council, as he works to ensure that any regulations implemented are effective and promote growth for the industry.
Messari CEO Ryan Selkis will also be part of the council, bringing his expertise in blockchain research to the table. Selkis has been a vocal advocate for clearer crypto regulations, stating that “We need the U.S. to be a dominant force in crypto innovation, and the only way that’s going to happen is if regulators provide greater regulatory clarity.” With Messari’s extensive research capabilities, the council will be able to provide policymakers with valuable insights into cryptocurrency fundamentals and best practices.
Chainalysis CEO Michael Gronager will complete the council lineup, bringing in blockchain forensic and analytics expertise to the table. By working with regulators, Gronager aims to promote transparency and accountability in the industry, with a focus on AML compliance and combating cryptocurrency-related crime.
Despite the council’s efforts to improve the crypto industry’s relationship with Washington, there are still many challenges to overcome. The recent surge in crypto scams and ransomware attacks has only increased regulatory concerns, with lawmakers looking for ways to combat these crimes while still promoting innovation.
The council will also have to navigate a politically fraught atmosphere in which many Republican politicians have expressed skepticism regarding the benefits of cryptocurrency. On the other hand, some progressive Democrats have been more receptive to crypto innovations, with Maxine Waters, Chairwoman of the House Financial Services Committee, signaling support for a “digital dollar” initiative.
To complicate matters further, the council also has to contend with the strong lobbying efforts of established financial firms who may see the emergence of decentralized financial systems as a threat to their business models. However, with anchor client FTX backing the council, it stands a better chance of pushing for meaningful change in the industry.
Overall, the CCI’s efforts to educate policymakers on the benefits of cryptocurrency and blockchain are a step in the right direction. By working together, industry leaders can create a more favorable regulatory environment for the development and growth of this transformative technology. By ensuring that policymakers understand the enormous potential of cryptocurrency, the CCI hopes to encourage the adoption of crypto-friendly policies, which will help the industry thrive and develop innovation in the years to come.
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When Washington, D.C. lawmakers tune into their favorite Sunday morning political shows this week, they’ll also get a dose of crypto messaging, thanks to a Coinbase (COIN) campaign that’s part of the next stage in the industry’s attempt to influence U.S. policy.
But the efforts from Coinbase CEO Brian Armstrong and a push from Messari CEO Ryan Selkis to build a well-funded movement to steer future crypto rules will land in a U.S. capital still trying to swallow the disasters the fledgling industry provided in the last couple of years.
In 2022, the narrative crypto lobbyists hoped to present to U.S. lawmakers plunged into chaos. The sector’s rampant business failures, frauds, hacking and consumer harms were a big part of that. But the members of Congress who will be responsible for any new crypto laws were also showered with campaign donations – with one in three current members receiving FTX executives’ money – and many of them have had to answer embarrassing questions and struggled to return tainted cash from the company.
As crypto lobbyists rebuild congressional relationships and prepare for a presidential election year, they’ve got a stiff challenge: “Paint a bright picture of the future and try to downplay the negative news events of the last year without pretending that they didn’t happen,” said Ian Katz, a managing director at Capital Alpha Partners, which analyzes policy developments in Washington.
A spokesperson for Coinbase didn’t answer when asked whether the company is considering the troubles of the recent past as it pushes its new campaign. “Coinbase is working closely with policymakers and regulators to get crypto regulation right – and ensure they understand the risks of getting it wrong,” the spokesperson said instead.
Armstrong’s face will appear in black-and-white TV commercial spots in Washington-area broadcasts, advising viewers that “Crypto is the most important technology we have to update the financial system globally.” They’ll carry the campaign’s tagline, “It’s time to update the system.”
Coinbase – linking this campaign with a previous initiative called Crypto435 to directly influence lawmakers in all 435 congressional districts – has also given a bespoke paint job to an armored truck. The vehicle – the kind used to shepherd hard currency to and from banks and businesses – will drive around Wall Street emblazoned with the words: “With Crypto, This Whole Thing Fits in Your Pocket.” And the company intends to otherwise paper the traditional New York center of finance with crypto messaging.
The ad campaign is reminiscent of previous efforts by crypto exchange Gemini, which plastered taxis and train stations with “The Revolution Needs Rules” banners, and Grayscale, which sought to encourage an approval of its Grayscale Bitcoin Trust product to an exchange-traded fund.
Meanwhile, the well known crypto entrepreneur and investor Selkis is expected to throw open the doors to an organization called the Digital Freedom Alliance as soon as next month, according to a person familiar with the situation. Selkis first pitched the idea for a more decentralized group to support crypto policy last year, and had taken to Twitter to encourage an effort he suggested will come from individuals and small firms.
He tried to light a fuse with a letter to the top lawmakers on the House Financial Services Committee that’s been working on crypto legislation, urging them to act quickly. He also forwarded that same note to other crypto-relevant members of Congress.
“Avoidance is no longer an option,” Selkis wrote in the letter he’d also posted on Twitter, though the posts have since been removed from his page. “Digital assets technology will not be uninvented. It has become too established, and offers too much economic promise.”
He called his letter “a first step, but there is much more to do in the upcoming battles.”
In recent crypto hearings on Capitol Hill, the industry that has long prided itself for standing apart from partisan politics was the subject of clear partisan divisions. Republican lawmakers have been much more likely to defend digital assets businesses, while many Democrats have been aligning themselves with crypto-skeptical chiefs of the U.S. financial agencies. That said, there is still some aisle-crossing on the current legislative efforts.
“Some lawmakers will continue to defend the industry, but a lot don’t trust it,” Katz said. “And the industry’s ability to influence policy has diminished, especially with current regulators and Democrats.”
Flooding Congress with crypto contributions was also – generally – the playbook followed by Sam Bankman-Fried, the disgraced ex-CEO of FTX. But it’s tough to measure the success of that widespread campaign largesse, because FTX blew up before Congress started this year’s session. And now Bankman-Fried’s donations are the subject of federal criminal prosecution for allegedly violating campaign-finance laws. That’s the climate Selkis’ effort would be stepping into.
“Repairing whatever damage occurred over the past year is going to happen through the process of better engagement and establishing better understanding with lawmakers that are working on these issues,” said Brett Quick, head of government affairs at the Crypto Council for Innovation. “It’s a longer endeavor to try to repair any trust that was lost.”
She said there’s “broad recognition” in Washington that the FTX collapse was a classic fraud that wasn’t about the technology, and industry representatives are still walking across the broken glass to explain their agenda in the meantime. The crisis even further underlined the need for a “cop on the beat” that crypto businesses have been asking for, she said.
While that day-to-day lobbying work happens, though, millions of U.S. crypto users are eager to make sure Congress is hearing their view that “we want to keep it here and we want to have robust rules,” Quick said, which explains the efforts from business leaders to drum up grassroots campaigns. There’s room for both, she argued – the lobbyists’ usual interactions in Washington, plus whatever the industry leaders are hatching.
“They’re not mutually exclusive,” she said.
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