Web3 lobbying expenditure has increased by over 922% since 2017
Crypto market participants and advocacy organizations including Coinbase, FTX.US, Binance.US, The Blockchain Association, and others spent over $25 billion in 2022 for their lobbying efforts with policymakers. The lobbying expenditure of web3 projects has increased by over 920% since 2017, according to a study by The Money Mongers.
Coinbase tops the crypto lobbyist list
It’s no news that lobbying, a process whereby individuals, private interest groups, or stakeholders in any particular industry make conscious efforts to influence the decisions of policymakers or government, is practiced in virtually all spheres of the global economy and the web3 space is no exception.
While lobbying is often confused for bribery by those who do not understand its workings, it remains an integral part of participatory democracy. Lobbying is practiced by captains of industries and advocacy groups in virtually all countries of the world, to make authorities formulate amenable and favorable policies for their sector.
According to a study by The Money Mongers, an independent crypto and web3 think tank co-founded by Sudhir Khatwani, cryptocurrency-related businesses in the United States alone spent $25.57 billion on their lobbying endeavors in 2022.
Brian Armstrong’s Coinbase, the largest bitcoin (BTC) and altcoins trading venue in the US by volume, spent $3.30 million on lobbying in 2022, making the 11-year-old exchange the highest spender in the region.
However, it’s worthy of note that despite Coinbase’s lobbying efforts, the exchange recently received a Wells Notice from the securities and exchange commission (SEC), for allegedly violating the country’s securities laws. How that battle ends remains to be seen.
Crypto lobbying on a steady rise
The study also shows that the total lobbying expenditure by web3 market participants over the last six years has increased by 922% over, rising from $2.5 million in 2017 to $25.57 billion in 2022.
Coinbase’s lobbying expenditure increased by 4,137% in the past six years, from $80,000 in 2017 to $3.39 million in 2022. Coinbase has so far hired 32 lobbyists and 26 revolvers. Revolvers refer to government workers who work with lobbying firms.
The Chicago Mercantile Exchange (CME) Group, comes second on the lobbying list, after spending $1.43 million last year. The CME Group has spent over $8 million on lobbying efforts since 2017, hiring a total of 20 lobbyists and 13 revolvers during that period.
Last year, the Blockchain Association, a leading web3 advocacy group spent $1.9 million on 18 lobbyists and 12 revolvers. Robinhood spent $1.84 million, Jack Dorsey’s Block Inc. spent $1.17 million and FTX.US spent $720,000 on lobbying.
More hurdles to scale
Despite spending big on lobbying over the years, the recent dark events in the industry such as the disgraced Sam Bankman-Fried’s FTX scandal and other high-profile bankruptcies have brought increased regulatory scrutiny upon the web3 space, giving market participants more work to do in terms of image redemption.
“As regulatory frameworks are being discussed and implemented in the U.S., the lobbying expenditure by U.S.-based crypto companies will only go up, and like any other industry, the cryptoverse is also trying and has had its fair share of successes and failures so far.”Sudhir Khatwani, co-founder and chief editor at The Money Mongers.
In all, crypto and the revolutionary blockchain technology that powers it has come to stay. However, industry players still need to put in more effort in terms of transparency, and accountability. Only then will more jurisdictions follow President Nayib Bukele’s El Salvador lead in legalizing these super-volatile digital assets.