US Cryptocurrency Industry Lobbies Congress with 200 Billion Won to Block Regulations

Passage of the '21segi Geumyung Hyeoksin gwa Gisul Beob-an' Drives Financial Innovation and Technology

According to the Washington Post (WP) on the 26th (local time), the cryptocurrency industry and investors in the United States have spent at least $149 million (approximately 200 billion KRW) on lobbying over the past four years to prevent stricter regulations from Congress.

According to WP, $60 million of the lobbying funds were used to influence federal government policies related to cryptocurrency. Notably, this played a driving role in the U.S. House of Representatives passing the '21st Century Financial Innovation and Technology Act' on the 22nd. The bill primarily aims to transfer some federal oversight authority over cryptocurrency from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC). WP explained that the CFTC is generally more industry-friendly compared to the SEC. For this reason, industry players such as Coinbase, Ripple, and the Blockchain Association have joined forces with House Republicans to lobby for the bill's passage.

Additionally, the industry poured nearly $90 million in campaign funds into recent two elections to help elect lawmakers favorable to cryptocurrency. This money was used to support lawmakers who introduced or supported the '21st Century Financial Innovation and Technology Act,' including Patrick McHenry (Republican, North Carolina), chairman of the House Financial Services Committee.

The bill is pending passage in the Senate. However, the Senate has not yet indicated whether it will bring the bill to the floor this year. The White House expressed a negative stance on the bill after it passed the House but, according to WP, did not warn that it would exercise a veto.

The SEC is strongly opposed. SEC Chair Gary Gensler expressed concerns in a statement that "the bill could create regulatory gaps and put investors and capital markets at risk."

The House is increasingly showing a pro-cryptocurrency industry stance. On the 23rd, the House passed a bill banning the Federal Reserve (Fed) from issuing digital currency, and earlier this month, it also put a brake on the SEC's cryptocurrency-related policies.

Meanwhile, WP evaluated that the presence of the cryptocurrency industry in the U.S. Congress has noticeably increased since the 2022 bankruptcy of the cryptocurrency exchange FTX. Following the FTX incident, voices calling for cryptocurrency regulation grew louder, which led the industry to intensify its lobbying efforts. The number of cryptocurrency industry lobbyists registered in Washington DC surged more than fourfold from 58 in 2020 to 270 by the end of last year.

Christine Smith, CEO of the Blockchain Association, which represents cryptocurrency companies and investors, said, "The cryptocurrency industry has certainly been penalized since the FTX bankruptcy," adding, "An organized and unified effort to engage with Congress is necessary."