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Ripple’s Lobbying Efforts in 2020 to Improve Crypto Regulation May Have Been in Vain

In 2020, Ripple Labs ran what may have been the cryptocurrency industry’s most expensive lobbying program, appealing to legislators to reconsider how securities laws classified and regulated crypto.

All in all, last year, Ripple Labs spent $690,000 for lobbying. Although it was the biggest amount of money spent on lobbying programs by anyone in the crypto industry, it was nonetheless not able to save Ripple from the Securities and Exchange Commission’s overpowering reach.

While Ripple’s lobbying expenses dwarfed that of other firms in the crypto industry like Coinbase, who spent $230,000 in the same year, it was nowhere comparable to the amount spent by tech giants such as Facebook. The latter spent over $5 million in the quarter of 2020 for lobbying purposes.

In 2020, Ripple transitioned from an in-house lobbying team to contracting professional lobbying firms. It funded bills such as the Token Taxonomy Act and the Digital Commodity Exchange Act, which were legislative pieces laying the groundwork for what cryptocurrencies would fall under the scope of securities and what would not.

The way securities laws operate is essential to Ripple’s business, as evidenced by the current lawsuit it now faces for XRP sales. Per the Securities and Exchange Commission, XRP should be classified as a security, which makes the $1.3 billion raised through its sale by Ripple Labs and its chief executives a violation of federal securities laws.

Petition filed with White House for XRP

Ripple Labs’ lobbying efforts is echoed by that of its community, a group of crypto hopefuls who have filed a petition with the White House at the beginning of the year demanding it declare XRP a virtual currency.

Per the petition, Ripple supporters believed the Securities and Exchange Commission’s lawsuit to be uncalled for, as they argued that XRP was previously classified as a currency by the Financial Crimes Enforcement Network (FinCEN).

They also evoke the fact that the SEC’s lawsuit alleging that XRP should be registered as a security has been damaging to the US market, wiping out billions of investments.

Currently, the official pre-trial court date for the lawsuit against Ripple is set for February 22, 2021, and will be hosted via video call.

As it is a pretrial, the hearing will be to ensure that the case is ready to proceed to trial on the designated date. Analisa Torres, the United States District Judge, has demanded that both Ripple and the SEC present compelling arguments for the case, including potential motions and the likelihood that a settlement could be agreed upon.

Foundry Digital Joins Forces with Crypto Lobbying Group Blockchain Association

Foundry Digital, a subsidiary business of Digital Currency Group (DCG) focused on digital asset mining and staking, on Thursday announced that it has become a member of the Blockchain Association, which is made of industry leaders advocating for the collaboration and innovation necessary to support American leadership in the crypto industry.

The association is a member-led organization committed to enhancing the public policy environment for digital assets. With more than 70 members, Blockchain Association combines its network and insight to create a unique, meaningful policy with industry consensus.

As a member, Foundry stands shoulder-to-shoulder with other industry-leading firms at the forefront of blockchain innovation. Foundry’s joining will therefore help leverage Blockchain Association’s platform, blending industry insights and legal analysis, to inform lawmakers of the crypto industry’s economic growth and technological innovations. Together, Foundry and Blockchain Association will assist in shaping public policy for the blockchain and crypto industry to ensure that the highest standards are adopted.

Kyle Schneps, Director of Public Policy at Foundry, talked about the partnership and said: “Foundry and its clients have grown rapidly and expanded operations in various regions that are often overlooked, demonstrating the type of economic development and community revitalization the crypto industry can bring to these regions. Blockchain Association will help us carry this message of success and growth to Washington, where lawmakers can help replicate our success in communities across the country.”

Advocating for Innovation

Communication and collaboration have never been more important in the blockchain industry than nowadays. The recent U.S. Infrastructure Bill was a crucial incident that hugely impacted the industry. The weeks and days leading up to the bill’s passing was a testament to the resilience and strength that the blockchain industry possessed when it remained united under a common cause. Hundreds of stakeholders within the sector worked together and signed a letter written by the Blockchain Association to urge an amendment. Members including Fireblocks, Blockdaemon, Anchorage Digital, Kraken, AVE, BlockFi, Circle, Grayscale stood alongside their other peers in the industry on such an incident. The members of the Blockchain Association deepen their position for advancing a pro-blockchain environment.

Crypto Industry Increases Lobbying Efforts During Crypto Winter

The crypto industry has been ramping up its lobbying efforts in recent years, particularly during the crypto winter that began in 2021. A new study published by the Money Mongers on February 23, 2023, sheds light on the increasing amount of money spent on lobbying by market participants in the United States.

According to the study, which analyzed data from OpenSecrets, a nonpartisan nonprofit organization that tracks lobbying expenses in the U.S., the crypto industry’s lobbying budgets increased by 922% over the past five years. In 2017, when Bitcoin’s price soared for the first time, the industry spent only $2.5 million on lobbying efforts. Last year, that number jumped to $25.57 million, and in 2021 alone, stakeholders raised their expenses by 121.41% to $11.54 million.

The study also found that the U.S.-based crypto exchange Coinbase was the largest spender, paying $3.3 million to 32 lobbyists in 2022. The Blockchain Association ranked second, with 18 lobbyists and $1.9 million spent, while Robinhood ranked third with 20 lobbyists and $1.84 million spent. Binance.US, the American subsidiary of the world’s largest crypto exchange, occupied only the ninth spot on the list with $960,000 spent in 2022.

Despite the increase in lobbying efforts, the overall expenditure of crypto companies on lobbying in America is modest compared to other industries. The pharmaceutical industry, for example, spent over $350 million in 2022 on federal lobbying efforts.

It’s worth noting that lobbying is an important aspect of any industry, as it allows stakeholders to advocate for policies that support their interests. In the case of the crypto industry, lobbying efforts may help shape regulations and laws that facilitate the growth and adoption of cryptocurrencies. It’s also worth noting that the increase in lobbying efforts may reflect the industry’s growing maturity and willingness to engage with policymakers.

Overall, the Money Mongers study highlights the increasing importance of lobbying in the crypto industry, particularly in the United States. As the industry continues to mature and grow, we can expect to see more lobbying efforts aimed at shaping regulations and laws that support its development.