Despite a season of layoffs and budget cuts, the crypto industry’s D.C. spending is stubbornly clinging close to all-time highs. The crypto lobby, in other words, is not going anywhere.
An analysis of disclosure data shows a collective industry spend just shy of $7 million in the last quarter. Though a slight retraction from a peak of just over $7.4 million in the second quarter of 2022, and a small decline from the third quarter, the findings reflect a remarkably consistent level of spending even amid one of the worst crypto bear markets in years.
Source: Senate Lobbying Disclosures; Analysis by Fortune
In total, in industry spent more than $27.5 million across 2022. To put that into context, the crypto industry's outlay is less than 10% of the $372 million spent by the pharmaceutical lobby—the single biggest spender—last year, according to data from OpenSecrets. But that $27.5 million is nearly half of what commercial banks spent on lobbying, and more than twice as much as what both the hotel and restaurant lobbies spent.
Fortune’s analysis included a roster of strictly crypto firms and groups, what they spent on external contracts and in-house lobbyists. In addition, the analysis included crypto-oriented fintech firms like PayPal and Block, whose current lobbying activity is heavily focused on Web3 issues. Overall spending from Meta, formerly Facebook, was not included, but specific contracts between Meta and outside firms were.
In the most recent quarter, this analysis tallied 53 firms or groups and 124 contracts or in-house lobbying shops.
The Lobbying Disclosure Act mandates reporting on a narrow range of activities as “lobbying” and doesn’t require people who spend less than 20% of their time lobbying to register. Consequently, these figures do not represent total spending on government relations.
“We’re at ground zero in terms of the legal framework. So the industry looks at that and says, 'If we’re not active in D.C., we’re not going to be there to structure how the industry grows up,'" says Adam Minehardt, who lobbies for the Stellar Development Foundation.
Despite the libertarian, anti-government ethos of early Bitcoin adopters, crypto firms have spent on lobbying since late 2014. But in the last few years, this spending has skyrocketed as the industry seeks to influence legislation, such as the infrastructure bill of 2021 as well as 2022 proposals to give the Commodity Futures Trading Commission jurisdiction over key crypto markets.
FTX was the most visible player in the latter push right up until its bankruptcy, when its lobbying went from a Q3 peak of $330,000 to nothing. Almost immediately after declaring bankruptcy in early November, FTX’s in-house government relations shop vanished, not filing any disclosures for the last quarter. Its outside contracts were terminated.
The firm’s collapse and the criminal prosecution of former golden boy founder Sam Bankman-Fried has soured many in Washington on crypto, and some firms are pulling back amid the hostility.
Coinbase has for years run the crypto industry’s largest lobbying machine, though the money it's spent has saved it from ongoing acrimony with the Securities and Exchange Commission. The largest U.S. crypto exchange slashed its reported spending nearly in half last quarter, from $1,040,000 to $590,000.
'Essential to take this step'
Digital Currency Group, whose subsidiary, Genesis, is navigating through bankruptcy proceedings at the moment, also noticeably pulled back its government relations work.
But even as some of the big players are spending less on lobbying, the government's recent focus on the crypto sector has also drawn a number of new players into the game.
In the last quarter, several big-name firms have registered in-house lobbying for the first time. Those include VC fund Andreessen Horowitz, futures exchange Bakkt, the Web3.0 Foundation—which develops and curates the Polkadot and Kusama networks—and Bitcoin miner Riot Platforms. Those registrations are just weeks old, with no spending yet reported.
“With crypto legislation now at the forefront of the policymakers’ minds, we felt it was essential to take this step,” a spokesperson for Andreessen Horowitz said by email.
Long a fixture in Washington, the Filecoin Foundation also registered for the first time in December. The foundation reported $150,000 in spending in the fourth quarter. Crypto exchange Kraken, meanwhile, filed its first registration at the end of November, ultimately reporting $240,000 in Q4 spending.
The main trade associations—the Blockchain Association, the Chamber of Digital Commerce, the Crypto Council for Innovation, and the Association for Digital Asset Markets—that represent swarms of crypto firms in Washington and coordinate those firms’ influence operations saw an overall increase from Q3 to Q4 of $834,000 to $1,010,000.
Kristin Smith, CEO of the Blockchain Association, which reported $490,000 on its most recent disclosure, told Fortune that lobbyists are racing to keep up with the fallout of FTX and a new Congress.
"[At least] we’ve got Sam Bankman-Fried and FTX out of the way,” she added.
Kollen Post is a freelance journalist based in Washington, D.C., who has reported for outlets including The Block.