FTX.US, BinanceUS and Gemini jumped into US lobbying in recent months, yet they trail Coinbase’s $1 million quarterly spend

Quick Take

  • The fourth quarter of 2021 saw a new surge in lobbying activity from cryptocurrency exchanges, especially those based in the US.
  • Coinbase’s lobbying program hit $1 million, while several other competing exchanges reported their first spending on lobbying ever. 

Per the latest data from the Federal Election Commission, lobbying programs have become practically a must-have for crypto exchanges, especially those based in the US. 

As was the case last quarter, Q4 saw Coinbase at the head of the pack. Its internal lobbying program grew to $740,000 with an additional $260,000 in contracts with outside law and lobbying firms. 

The combined total of Coinbase’s reported lobbying spending hit $1 million even for the quarter, an unprecedented figure for the industry. 

The Block has previously noted a surge in lobbying spending as a result of fights over crypto tax reporting language in the Infrastructure Bill that began in Q3 2021. Coinbase’s most recent lobbying reports indicate a continued interest in those reporting requirements, which the Treasury has yet to clarify

Meanwhile, the Crypto Council for Innovation, a high-profile lobbying initiative from Fidelity and Square (now Block) alongside Coinbase back in April, terminated its last contract. 

Other leading US crypto exchanges also stepped up their lobbying activities.

BAM Trading Services, the Delaware-registered corporate entity for Binance.US, registered its first contracts with lobbyists at the end of September and beginning of October, ultimately reporting $60,000 through Q3. Those figures rose to $180,000 in Q4, spread between three firms. 

FTX US — officially, West Realm Shires Services Inc. — reported its first incursions into lobbying, registering contracts two within January that they reported spending $50,000. The two firms they contracted, Rich Feuer Anderson and T Cap Solutions. T Cap is a new boutique advisory firm founded by Charlie Thornton, a former advisor to Heath Tarbert during the latter’s time chairing the Commodity Futures Trading Commission. 

Neither Binance.US nor FTX.US’s lobbying declarations named their global brands as affiliates. 

Crypto exchange and stablecoin issuer Gemini also released its first reports on its lobbying activities though those extend back to Q3 and seem to have stayed at a single $60,000 per quarter contract with Sternhell Group. Sternhell Group is run by Alex Sternhell, an advisor at Coin Center and former staffer for the Senate Banking Committee.

The Block could find no reports of lobbying from the other largest US-based exchange, Kraken, which operates under the business name of Payward.

A number of factors contributed to new interest in influencing federal policy in addition to the notorious tax brokerage act. For one, Gary Gensler, the chair of the Securities and Exchange Commission, has spent much of the past year indicating that he would like to bring centralized exchanges into the reporting regime that securities exchanges are subject to. Gensler has also gotten some legislative support for his pursuit of such a policy change. 

Moreover, Gensler has been pushing on crypto lending products, including shutting down the prospective Coinbase Lend. Gemini has offered a similar lending product for some time. 

Meanwhile, FTX.US has invested heavily in making inroads with the Commodity Futures Trading Commission, corresponding to its work to get approval for crypto derivatives trading in the US.

The Lobbying Disclosure Act maintains a fairly narrow definition of lobbying that requires disclosure. These figures should, therefore, not be taken as anywhere approaching the beginning and end of these firms' policy departments. 

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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