- Ripple along with Binance and Coinbase have paid almost $3 million to sway lawmakers this year.
- Bills that may shift oversight from the SEC to the CFTC await US lawmakers when they return from recess this week.
- Ripple, buoyed by its win over the SEC this summer, uses so-called revolvers to sway lawmakers.
As Congress returns this week from its summer recess, the efforts of Ripple — as well as the industry at large — may go into overdrive as lawmakers field more than a half-dozen crypto bills.
Since the US Securities and Exchange Commission sued Ripple in 2020, the crypto payments firm has duelled with the government’s lawyers and called on officials to recognise crypto’s special properties as a technology and as an asset class.
This summer, the long-running litigation resulted in a partial win against the markets watchdog, emboldening other firms who face similar lawsuits.
What may be less known is how Ripple is lobbying lawmakers on Capitol Hill to support legislation that could reshape the crypto markets.
It has, among other things, lobbied to influence bills seeking to make the Commodity and Futures Trading Commission the main regulator for the industry instead of the SEC, according to data from OpenSecrets, an organisation that tracks political contributions.
But a battle may be looming. In July, 18 consumer protection groups sent a letter to the co-sponsors of a key crypto bill. They warned that “a concentrated lobbying effort by the crypto industry” had resulted in a proposal that threatened to “weaken consumer and investor protections for both traditional and crypto investors.”
In particular, they objected to the CFTC taking on more responsibilities to regulate crypto spot markets, without granting it more resources.
How much is Ripple spending on lobbying?
Since the beginning of 2023, Ripple has spent almost $500,000 on lobbying in the US, continuing the tempo of the previous two years with yearly spending of around $1 million, according to data from OpenSecrets.
Crypto exchanges Coinbase and Binance’s spending dwarfs Ripple’s — they spent $1.4 million and almost $1 million respectively in the first six months of the year, as DL News recently reported.
Those three firms, Crypto.com, and the Blockchain Association, the industry’s trade group, make up the five largest lobbying spenders of the sector in 2022, according to OpenSecrets’ analysis.
The sector’s spending as a whole has grown at a rapid clip. In 2022, 60 crypto companies spent $22 million on crypto lobbying in the US, almost triple the amount in 2021, according to OpenSecrets. The number of lobbyists employed by crypto firms almost doubled in 2022 to 283, up from 147 in 2021.
Still, Ripple’s history of lobbying stands apart as it prepares to influence shakers and makers on Capitol Hill as they return for the final legislative session before the 2024 presidential contest begins in earnest.
Despite the crypto industry being tiny compared with the traditional finance sector, its lobbying tab accounted for almost 15% of Wall Street’s total spend in Washington last year, according to data from OpenSecrets.
Ripple declined to respond to questions about its lobbying efforts and referred DL News to its public disclosures.
Ripple upped its lobbying after it was sued by the SEC
Ripple, which uses blockchain technology to facilitate cross-border payments, has been lobbying US lawmakers since 2015, according to OpenSecrets. That year it spent $150,000 in total.
Over the next five years its annual spend steadily increased until 2020. That’s when the SEC accused Ripple of having raised $1.3 billion through an unregistered digital assets offering of XRP, the cryptocurrency the company uses in its business. In 2021, the company tripled its lobbying spend to $1.1 million, OpenSecrets data shows.
By comparison, Binance spent $160,000 on lobbying in 2021 and Coinbase spent just north of $150,000.
The SEC’s case against Ripple came to a head this summer when a judge ruled in it. Ripple said that the ruling “definitively declared that XRP is not a security” and its CEO has announced “a proper victory party,” but the verdict is not that clearcut.
At the same time as the judge ruled that programmatic sales and distributions to employees were not securities transactions, she also said institutional sales were.
However, the SEC is not giving up. The regulator has sought to appeal the case, potentially setting the stage for another courtroom clash in the second quarter of 2024.
What crypto bills is Ripple trying to influence?
Over the years, Ripple has paid lobbyists as lawmakers have considered an increasing number of crypto measures. Many in the crypto industry would like the CFTC to be their primary regulator. The reason: the CFTC is widely seen as a less strict regulator than the SEC — which has brutally cracked down on crypto companies this year with a wave of enforcement actions and lawsuits — and in recent months it’s shown an openness to working with the industry.
“Consumers need protection, but not all roads lead to the SEC,” Ripple wrote in a report in July. “If the SEC’s overreach has exposed a regulatory gap, that gap is not for a court to fill (and certainly not for the SEC to fill without legal authority).”
CFTC chair Rostin Behnam has said his agency would need $120 million over the next three years if it was called on to watchdog crypto.
Like many of its rivals, Ripple has enlisted the help of top lobbyists on K Street, the power corridor in Washington.
It has employed firms such as Williams & Jensen, which represents around 100 clients, including the asset management giant Vanguard Group.
Another lobbyist on Ripple’s payroll is Michael, Best & Friedrich, which also counts ExxonMobil, and Deutsche Telekom among its clients.
Ripple has tapped the services of so-called “revolvers” — onetime regulators or lawmakers who leverage their expertise and networks on the Hill to advance the agendas of their clients. It hired a total of nine revolvers in 2023, according to OpenSecrets.
The people on Ripple’s payroll include the former top Republican on the House Agriculture Committee, Mike Conaway, who was also hired by FTX in 2022 before the exchange imploded that November.
Another noteworthy revolver is Bridget Visconti, who got back into politics in February to become a legislative assistant for Republican Congressman Rudy Yakym.
‘In the wake of the FTX collapse, regulators have redoubled their efforts to establish a regulatory framework for crypto.’— Olivia Buckley
In other words, as Congress returns from recess it appears the crypto industry will be confronting its most active period on Capitol Hill ever.
“In the wake of the FTX collapse, regulators have redoubled their efforts to establish a regulatory framework for crypto,” Olivia Buckley, researcher at OpenSecrets, recently told DL News. “Since those efforts are gaining traction and more comprehensive regulation seems somewhat inevitable, crypto firms have a vested interest in shaping new legislation as it advances.”
Eric Johansson is DL News’ News Editor. He is based out of London. Ana Ćurić is DL News’ Investigative Journalist and Researcher. She is based in Belgrade. Email us with tips on email@example.com and firstname.lastname@example.org.