It’s crunch time for crypto in Washington, DC
A regulatory battle is coming and the federal government is barking its teeth in nasty ways. These include the Treasury Department pushing the global Financial Action Task Force to adopt anti-crypto regulations, and a slew of new investigations by the IRS. In the meantime, Congress still shows no sign of passing common sense measures – such as a de minimis tax exemption for crypto transactions under $ 200 – that would make crypto more appealing to consumers.
The situation calls for the crypto industry to push for clear policy proposals, backed by a crack lobbying game. Sadly, the industry is being crushed instead of schism and infighting – a situation reflected in the scattered number of trade groups who all claim to be talking over crypto.
This week, a new Washington, DC lobby group kicked off. It includes two of the biggest names in the crypto world, Paradigm Coinbase and hedge fund, and two heavy hit from the fintech and finance realms, Loyalty and Square. Together, the companies plan to consider the benefits of digital currency for law makers under the banner of a trade group called the Crypto Innovation Council.
At first, the arrival of the CCI – and the four wealthy and influential companies that support it – looks like good news for the industry. Skeptics, though, say the CCI, rather than boosting the crypto case, will fuel the long-held industry-leading fascism to punch below its weight in Washington.
For those who keep an eye on such things, the CCI is at least the sixth crypto trade group operating in the country’s capital. Most important of all are the Blockchain Association – an umbrella group that Coinbase bolted to last summer – and Coin Center, a not-for-profit research center.
Then there’s the Digital Asset Markets Association, a outfit backed by a former Ripple executive who has so far not paid much attention, and the Digital Chamber of Commerce, which has gathered enough members, but which critics regard as a marketing operation glorious for stodgy companies who want to appear hip to blockchain. Also on the list is an operation called the Virtual Commodities Association, launched by the Winklevoss twins in 2018, all but moribund today.
In theory, more trade groups should mean more lobbying power for the crypto industry. But Washington insiders tell me the opposite is true. They say the advent of the CCI will make it harder for the industry to deliver a unified message to Congress, and that the spread of lobbying money across several organizations will make it more difficult to influence law makers .
Allies of the Blockchain Society also quietly provoke Coinbase and Paradigm, accusing it of arrogance and trying to reinvent the rigid rules of politics in the Capitol.
People close to CCI don’t see it this way of course. For their part, they claim that a new lobbying group is needed because the current ones have failed to exert any real influence or alter the narrative, popular in Washington, that crypto is little more than a tool money laundering. They also claim the Blockchain Association made a fatal error by admitting Binance US – a decision that left the group pocketing a $ 250,000 membership fee. Tuners say the legislators were scared to be wary of Binance’s possible ties to China.
The two factions – the CCI upstairs and those affiliated with the Blockchain Association – argue well. But that’s a problem because this schism could not come at a worse time for the crypto industry: The US government is an existential threat to crypto. The industry needs to introduce a united front.
Instead, as has been the case since 2014, when an advocacy group called the Bitcoin Foundation collapsed amid corruption and breaking the law, the biggest players in crypto remain incapable of working together.
It doesn’t have to be this way. Take a look at Big Tech, where bitter rivals like Google, Amazon and Facebook congregate under the same umbrella to push policies favorable to their industry.
“People who are tormented competitors in the market realize that it makes sense to join,” a Blockchain Association supporter lamented to me. “That’s what mature industries do.”
Crypto is not a mature industry, of course, and it may become one in time. For now, though, crypto companies of all stripes had a better chance that they could find a way to exert influence in Washington – before much of what they had built was unleashed by the US government.
This is it Roberts on Crypto, a weekend column by Decrypt Editor-in-Chief Daniel Roberts and Decrypt Executive Editor Jeff John Roberts. Sign up for the Decrypt email newsletter to receive in your future inbox. And read last weekend’s column: Why the NFT Boom feels so much like gambling.