Revolving Door for Pro-Crypto Lobbyists and Politicians Is Emerging, Report Warns

On Tuesday, consumer advocacy group Public Citizen published a new report diving into the explosion of cryptocurrency lobbying on Capitol Hill and a burgeoning revolving door between regulators and the industry.

Since 2018, lobbyists directly employed by cryptocurrency firms and lobbyists working on crypto-related issues have seen a massive explosion. According to the report, the industry has gone from deploying 47 lobbyists and spending $2.2 million in 2018 to spending $9 million and directly employing 157 lobbyists in 2021. Public Citizen also highlighted 163 additional lobbyists for pro-crypto organizations who reported lobbying on crypto-related issues. In total, Public Citizen counted 320 crypto lobbyists in 2021, up from 115 in 2018, an "extraordinarily rapid increase in lobbying for an emergent sector" according to the report.

“Like the megabanks, tech companies, fossil fuel corporations, and other industries, the crypto sector is putting millions and millions of dollars into pushing lawmakers to put their private business interests before the public interest," research director Rick Claypool writes in the Public Citizen report. "In Washington, D.C., where money speaks loudly, the digital currency lobby is determined to have a say. In the face of this lobbying spree, even the most crypto-friendly lawmakers should pause to ask whether what is good for this volatile sector is what’s best for their constituents.”

Some of the largest non-crypto firms that used lobbyists to advance crypto-related issues include the U.S. Chamber of Commerce (32 lobbyists), Facebook (27), the National Venture Capital Association (24), IBM (16), Fidelity Investments (13), and Accenture (11). Unsurprisingly, though, the largest spenders were some of the biggest names in the crypto industry. 

Coinbase—which likely spent $14 million on a minute-long Super Bowl QR code commercial on top of a multi-million dollar lottery giveaway—spent $1.5 million on 26 lobbyists that were both in-house and from seven different firms. Compare that to $230,000 spent on seven lobbyists in 2020, according to Public Citizen's report. Spokespeople for Coinbase did not respond to a request for comment. 

Ripple Labs, a blockchain finance company, comes in at second with $1.1 million on 14 lobbyists from three firms—triple what it spent on nine lobbyists last year, the report found. In a Financial Times report on Ripple's struggles with "trying to find compelling uses for the blockchain technology underpinning its currency,” chief executive Brad Garlinghouse entertained dreams of becoming the “Amazon of payments” in the cryptocurrency world. In the meantime, it is fighting the Securities and Exchange Commission on charges that Ripple raised $1.3 billion through the sale of unregistered digital securities. Ripple Labs did not respond to a request for comment. 

There are also some interesting forays from former politicians into lobbying. Diem, Facebook's crypto project that imploded spectacularly and was sold off to a California bank earlier this year, registered four lobbyists including a former member of Congress, Rep. Sen Duffy (R-Wis). Atlas Power Holdings, the private equity firm that revived an abandoned coal power plant in upstate New York to mine cryptocurrencies, joined Capitol Hill in 2021 by spending $320,000 on ten lobbyists. That all-star team included "several former senior congressional officers" as well as former U.S. Senator Mark Pryor (D-Ark.).

The prevalence of former public servants in crypto lobbying is not limited to those two operations—one of Public Citizen's key findings was that a revolving door similar to finance, for example, is emerging in the cryptocurrency industry. Former senators, House representatives, White House officials, Treasury officials, SEC and CFTC and FCC regulators have all jumped at the chance to work for the private sector, the report found.

“Crypto proponents are taking full advantage of former officials who are cashing in on their connections,” Public Citizen writes in its report. “Public officials-turned-lobbyists have access to lawmakers and regulatory  officials that is not available to the public, and they sell their access to the highest bidder among industries seeking influence.”

One of the major examples highlighted by Public Citizen is Bitfury CEO Brian Brooks. Once upon a time, Brooks was the chief legal officer for Coinbase. When Trump Currency Comptroller Joseph Otting left, Treasury Secretary Steven Mnuchin chose Brooks to serve as Acting Comptroller. In his nine months in the Trump administration, he signed off on crypto-friendly measures, then went on to become CEO of Binance.US before taking the helm at Bitfury. CoinDesk obtained Brooks' calendar of appointments during his tenure through a FOIA request and found about 40 meetings that dealt in one way or another with crypto. In December, Brooks joined a number of other crypto executives to testify before Congress that self-regulation was the best way forward for the crypto sector.

Politicians and regulators are not the only ones walking through the revolving door, however. While the GOP has caught attention for members of Congress buying crypto, former staffers who worked for Democratic leadership—such as Senate Majority Leader Chuck Schumer (D-NY), House Leader Nancy Pelosi (D-CA), and Majority Leader Steny Hoyer (D-MD)—have proven to be a reliable source for revolving door lobbyists disclosed in 2021 records. Since working for Congress as legislative directors and aides, chiefs of staff, counsels, and staff directors, they've gone on to lobby for firms and groups like Diem, Facebook, Ripple, Robinhood, Coin Center, Visa, Mastercard, and Atlas Power Holdings.