Amid intensifying regulatory scrutiny of cryptocurrencies and blockchain ventures, some of the sector’s leading startups and investors have formed the Blockchain Association, a lobbying group that will try to amplify their influence in Capitol Hill and around the country.
The nonprofit trade association’s initial members include San Francisco-based Coinbase and its competitor, Boston-based Circle Internet Financial, operators of two of the most active digital currency exchanges. Well-known blockchain/crypto investment firms Digital Currency Group and Polychain Capital have also joined. In a Tuesday blog post announcing the Blockchain Association, the Washington, DC-based group said its first hire is director of external affairs Kristin McKenzie Smith. She previously was a legislative assistant to former Maine Republican Senator Olympia Snowe, and she was a Washington lobbyist with Alpine Group, according to her LinkedIn profile.
In addition to lobbying lawmakers, the Blockchain Association said, one of its aims is to “educate policymakers and the public on the benefits of blockchain and related technologies.” That’s a standard goal for any lobbying group, but it could be especially crucial for the blockchain and cryptocurrency industry, which is peddling complex technologies and has quickly “evolved from a cluster of hobbyists into a global industry with billions of dollars of invested capital,” as the Blockchain Association put it.
“On the industry side, innovators face regulatory minefields,” the group wrote in the blog post. “On the policy side, lawmakers must navigate trust and safety, security concerns, and consumer protection. Among the general public and members of the media, many people do not understand what blockchain is — and isn’t.”
Some industry advocates believe blockchain systems could represent the next phase of the Internet. Other enthusiasts think blockchain technologies—which underpin Bitcoin and other cryptocurrencies—could significantly transform finance and a host of other industries. Some believe both. It’s way too early to tell whether any of that will happen, but at the very least, forming a trade group may help the various players in this nascent sector hone their public messaging.
It’s not surprising that they’re banding together now to try to exert more influence on lawmakers. In May, securities regulators in states and provinces across the U.S. and Canada announced a coordinated series of investigations into potential industry wrongdoing, including alleged unregistered securities offerings and potential scams by groups raising money online through so-called “initial coin offerings,” the Washington Post reported. Meanwhile, in July the U.S. Securities and Exchange Commission rejected another attempt by entrepreneurs Cameron and Tyler Winklevoss to create a Bitcoin exchange-traded fund, the Post reported. Such a fund is seen as a way to enable more people to invest in Bitcoin and help bring digital currencies into the mainstream.
The industry has notched some recent wins, too. On Monday, the New York Department of Financial Services authorized two companies—including the Winklevoss twins’ Gemini—to each launch so-called “stablecoin” cryptocurrencies whose price is pegged to the U.S. dollar. The idea is to offer digital currencies that avoid the wild price fluctuations that have dogged many cryptocurrencies.
For Circle, whose executives have touted their strategy to work aboveboard, the Blockchain Association gives more structure to conversations the company has been having with government officials for several years.
The question is whether more formal lobbying efforts will pay off for Circle and the rest of the industry—and what the impact will be on consumers, businesses, and technology.
