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Crypto Lobbyists in Washington D.C. Face Challenges After FTX CEO’s Meeting With Powell

Cryptocurrency lobbyists in Washington D.C. are facing difficulties as they navigate the aftermath of a meeting between FTX CEO Sam Bankman-Fried and Federal Reserve Chair Jerome H. Powell. In early 2022, an FTX executive reached out directly to Powell to request a meeting with Bankman-Fried, which was granted. The records show that Bankman-Fried also had meetings with other top officials, such as Lael Brainard and Martin Gruenberg. However, the cryptocurrency industry is now grappling with a more challenging environment following the collapse of FTX and the subsequent government crackdown on the industry.

Companies in the crypto space are still investing significant amounts of money in lobbying efforts, but they are finding it harder to gain access to influential policymakers and regulators. Some congressional offices have become reluctant to meet with industry representatives, and crypto lobbyists are appearing less frequently on the public calendars of key officials. As a result, companies are having to adjust their strategies and distance themselves from FTX to improve their chances of engagement.

The crypto industry is striving to shift the focus away from FTX as Bankman-Fried’s trial approaches. Stand With Crypto, a nonprofit backed by Coinbase, is planning a “fly-in” event to bring industry players from across the country for discussions with lawmakers.

The changing dynamics in Washington reflect a shift in attitude towards the industry. Lawmakers who were once more friendly towards crypto are now advocating for stricter oversight. Regulators have also been more cautious about embracing crypto firms, and FTX’s direct meeting with the Fed chair was an unusual occurrence.

The records highlight the extensive network of influence that FTX cultivated, aided by the connections of Mark Wetjen, an FTX policy official and former commissioner at the Commodity Futures Trading Commission. FTX’s financial contributions further strengthened its presence in congressional offices and think tanks.

Neither the Fed nor Wetjen provided a comment for the article. The White House did not comment on Brainard’s meeting with Bankman-Fried, and the Federal Deposit Insurance Corporation noted that courtesy visits with financial firm leaders are common.

FTX’s interactions with the Fed did not yield the desired results, as the Financial Stability Oversight Council, which includes the director of the Commodity Futures Trading Commission, decided to further study the proposed setup for crypto asset exchanges instead of approving it. FTX’s downfall has bolstered regulators’ arguments for careful regulation of crypto firms. The Securities and Exchange Commission has also filed lawsuits against FTX’s competitors, Coinbase and Binance, as part of a broader government crackdown.

Despite the challenges, the crypto industry continues to exert influence in Washington through lobbying efforts and financial contributions. However, the landscape has become more difficult, and companies must adapt to ensure favorable regulatory oversight in the future.

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