Cryptocurrency lobbyists were once riding high in Washington, with easy access to top officials and federal regulators. However, after the collapse of cryptocurrency exchange FTX and the subsequent arrest of its founder, Sam Bankman-Fried, the industry is facing a more challenging landscape in the nation’s capital.
In early 2022, FTX executive Mark Wetjen felt comfortable emailing Jerome H. Powell, the chair of the Federal Reserve, to request a meeting with Bankman-Fried. Surprisingly, Powell agreed to the meeting, and it took place as planned. Wetjen also sent the Fed chair two policy papers recently published by FTX. The records obtained through a public records request also show that Bankman-Fried secured a virtual meeting with another top Fed official and met with the head of the Federal Deposit Insurance Corporation.
However, with Bankman-Fried’s trial approaching and the collapse of FTX casting a shadow over the industry, the cryptocurrency sector is facing more difficulty gaining access to key officials. Some congressional offices are reluctant to meet with industry representatives, and crypto lobbyists appear less frequently on the public calendars of regulatory agency officials. The industry has had to shift strategies and distance itself from FTX in order to be heard.
In response to the industry’s current challenges, the nonprofit organization Stand With Crypto, backed by Coinbase, is planning a “fly-in” to bring industry players from across the country to engage with lawmakers. Despite the setbacks and tarnished reputation, the crypto industry continues to pour millions of dollars into lobbying efforts and advocating for favorable regulations.
The shift in sentiment can be seen in Washington. Lawmakers who were once friendly towards the industry have become more skeptical and are calling for stricter oversight. Regulators were also cautious even in 2022, and it was unusual for FTX to secure a meeting with the Fed chair. However, the collapse of FTX and the subsequent crackdown on the industry by the government have justified the regulators’ concerns.
As FTX’s demise has strengthened the arguments of regulators who want to approach crypto firms carefully, other cryptocurrency exchanges, such as Coinbase and Binance, are now facing legal action from the Securities and Exchange Commission. With Bankman-Fried out of the picture, other financial technology companies are now spending millions to shape future regulatory oversight to their advantage.
While the industry may face more scrutiny and skepticism in Washington, the influence of money cannot be underestimated. Despite the challenges, cryptocurrency companies are still able to open doors with their lobbying efforts. The industry continues to fight for its place in the regulatory landscape, even as it faces a more difficult path forward.
