Stablecoin Push Unleashes Flood of Crypto Lobbying Cash in US Congress
(Bloomberg) -- Lobbying over new guardrails for crypto stablecoins jumped for most of 2023, part of an overall surge in the industry’s spending to sway legislative outcomes on Capitol Hill.
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The stakes around stablecoins are high because the tokens, which are supposed to be backed by safe and highly liquid assets like dollars or Treasuries, serve as the bridge between crypto and the traditional financial system. Federal regulation would lend legitimacy to the asset class that could lead to broader adoption.
Oversight for stablecoins has been singled out as a priority by Biden administration officials, congressional Democrats — many of whom count themselves as crypto skeptics, and Republican lawmakers, who are generally seen as more friendly to the industry.
The bipartisan interest has continued even after the implosion of Sam Bankman-Fried’s FTX empire pushed the two sides further apart on other issues pertaining to digital assets. It’s also coincided with a gush of lobbying money, including from Tether, the issuer of the largest stablecoin, during the first three quarters of 2023. Results for the full year aren’t available until 2024.
Lobbying dollars spent on behalf of Tether Operations Ltd. jumped to $760,000 during that period —- the sixth most by any crypto firm, and about double the previous year, according to data provided by OpenSecrets based on federal disclosures. Competitor Circle Internet Financial LLC, which is represented by Invariant LLC, spent $300,000, compared with $270,000 in the first three quarters of 2022.
A spokesperson for Tether said the company is focused on shaping future digital asset policy by educating and having ongoing discussions with policymakers and regulators. Circle declined to comment.
The top crypto spender on all issues, digital-asset exchange Coinbase Global Inc., disclosed that a chunk of the more than $2 million it spent in the first nine months of the year went toward stablecoins. Traditional financial firms, including Bank of America and Visa also lobbied on the issue, as did the U.S. Chamber of Commerce.
“We need policymakers to provide affirmative clarity for the regulation of payment stablecoins to grow the digital assets market in the U.S.,” Bill Hulse, senior vice president at the U.S. Chamber of Commerce Center for Capital Markets Competitiveness, said in an emailed statement.
Overall, 161 lobbying disclosure reports mentioned stablecoin legislation or oversight — a 79% increase from the 90 that mentioned the topic during the first three quarters of 2022, according to federal disclosures.
“A lot of people thought the stablecoin bill was going to go this year,” said Sheila Warren, the chief executive officer of the Crypto Council for Innovation, a crypto-focused trade group. So it’s not surprising companies were spending more, she said. “Probably, that number will continue into next year,” she said. Her firm spent $710,000 lobbying on a range of industry issues through the first three quarters.
The front line of the political battle over stablecoins is the House Financial Services Committee. This past July, the GOP-led panel advanced a bill on the tokens without the support of the panel’s top Democrat, Maxine Waters. Negotiations between Patrick McHenry, the North Carolina Republican who chairs the committee, and the California Democrat are expected to kick back into high gear in 2024.
‘Busy Year’
Crypto firms’ spending on lobbying extends well beyond stablecoins, and overall it is on pace to set a record. They spent $19.3 million on those efforts in the first three quarters of 2023, topping the previous high of $15.6 million over the same time period last year, the OpenSecrets data showed.
The House Financial Services and House Agriculture Committees also advanced bills to clarify when the crypto industry is overseen by the Securities and Exchange Commission and when it falls under the purview of the Commodity Futures Trading Commission. A turf battle between the two agencies has become a focal point for the sector with many players supportive of the CFTC gaining more power.
“It’s just been a busy year and so there’s a lot to advocate on,” said Faryar Shirzad, Coinbase’s chief policy officer. Shirzad said he expects industry spending to continue or even pick up in 2024.
After Coinbase, the biggest spenders included Foris DAX Inc., which does business as Crypto.com, the Blockchain Association, and Binance entities such as Binance Holdings Ltd., which agreed to pay $4.3 billion to settle cases with several US authorities in November.
Blockchain Association head Kristin Smith said that her trade group’s goal was to “engage directly with policymakers, build relationships, and bridge the education gap to build a commonsense regulatory framework.”
Digital-asset advocates are also opening their wallets for political donations ahead of the 2024 elections. A more crypto-friendly White House, or Republican control of both chambers of Congress, could usher in policies that are more favorable to the sector.
A full year before elections, the industry is already building its war chest. Fairshake, a super-PAC that supports pro-crypto candidates, announced this week that it had raised $78 million. Its contributors include Coinbase, Circle, Ripple and venture capital firm Andreessen Horowitz.
(Updates with comment from the U.S. Chamber of Commerce in the eighth paragraph.)
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