NYU Public Policy Professor Gives Crypto Industry a Solid 'B' Grade for Recent Lobbying Activities
by Tor Constantino | Published on Nov. 5, 2021
Blockchain advocates are spending enough and meeting with the right lawmakers, but crypto's complexity requires more effort and education directed toward politicos.
- The cryptocurrency industry spent $2.2 million in lobbying activities in Q3 of this year, double the amount spent in the previous quarter.
- A former congressional staffer turned lobbyist turned NYU professor is impressed with crypto industry ramp-up and momentum.
- While crypto was strong out of the gate in Q3, he says they have to step up educating efforts for policymakers.
Last quarter, cryptocurrency companies and blockchain industry associations spent around $2.2 million on lobbying both houses of Congress. According to lobbying disclosures, that amount was twice what the crypto industry spent during the second quarter. The digital asset firms mobilized their collective political mojo to fight ill-conceived language that was (and still is) in the languishing trillion-dollar infrastructure bill that was slapdashed together this summer.
What is driving blockchain-related organizations to lobby so hard?
The two main issues they oppose are vague language around crypto "brokers," which would require onerous transaction reporting requirements on crypto users ranging from individual crypto miners to multi-billion-dollar digital exchanges. The other deals with amended language are in regard to IRS Title 26, U.S. Code, section 6050I, which states that if someone receives up to $10,000 in cryptos or NFTs, they have 15 days to secure and report all kinds of private info about the sender to the IRS. Both measures seek to syphon digital dollars to offset costs of the infrastructure buildout.
The crypto lobbying collective advanced its opposition by securing meaningful amended language to the respective versions of the bill, but it ultimately fell apart at the last minute. All is not lost, however. First, it's not a certainty that the bill will pass. Second, even if it does, the crypto reporting pieces of the legislation would not take effect until 2024, and due to the strong relationships the crypto lobbyists have established with key congressional members, it's possible that the problematic language could be amended or axed before it kicks in. Based on those efforts and outcomes, I decided to ask an expert to grade crypto's lobbying performance.
NYU public policy prof gives crypto lobbyists a solid "B" grade
Andrew Barnhill is an assistant professor at NYU Robert F. Wagner Graduate School of Public Service where he's taught public policy for nearly five years. He has 15 years of combined experience in politics and policy, including as a Washington, D.C. lobbyist and congressional staffer. He has also led public policy for multiple companies, and he has two graduate degrees and a law degree from UNC and Duke respectively. He said that crypto made a strong showing in its debut on The Hill.
"I'd give them an 'A' in spending, an 'A' for targeting the correct committee members, a 'B' for presenting a unified front, and I'd give them a 'B-' on education for a total grade of a 'B.' That's solid work for a first time effort under tight time constraints," Barnhill told me during a call. "In fairness it takes awhile to educate on complex topics such as technology and cryptocurrencies. It may take crypto awhile to gain that foothold."
Where they're doing well and where they need to improve
Barnhill said he liked the fact that the various blockchain associations and crypto companies worked together on this initiative, which he said isn't always the case when competing organizations try to DIY lobbying efforts. He also said they were smart targeting lawmakers with relevant committee assignments and the correct staffers of those lawmakers which Barnhill says demonstrates "... good legwork and strategic thinking."
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However, he did say crypto companies need to start creating political action committees (PACs). PACs are necessary to get on the radar and start discussions with more congressional staffers and policymakers because education is going to be critical for crypto to be successful.
"They have a huge lift with education, so they're trying to teach members of Congress and their staffs about this new type of digital currency AND how it's based on blockchain technology. Both those concepts need to be distilled down to the basics of how they work and the benefits they provide. We can see they're trying to do that within the crypto industry, but they need to do more. They've got to really quickly increase the level of literacy among congressional staff members," Barnhill told me.
Lobbying is not buying votes or favors -- it's building relationships through education and mutual understanding
Educating politicians is one thing, but lobbyists need to also educate the public about their role in the political process. Barnhill stressed that there are a lot of misconceptions about how lobbyists work and get results. "There's this sort of general perception by some of the public that we are buying particular outcomes. Or we are giving money to offices to get their members to vote a certain way, but that's not the case at all, said Barnhill. "What you're doing is spending to try to develop an advocacy campaign that educates and creates subject matter experts among congressional staffers and ultimate policymakers."
He said that education is necessary because politicians are not experts on everything -- they can't be, but yet they're elected to govern over everything on our behalf. We need lawmakers to understand the issues and outcomes of the policies they make. If they don't, that's how bad laws get enacted, and we've seen enough of that from both parties over the past several years.
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