A group of financial technology companies is banding together to lobby lawmakers and regulators on cryptocurrencies -- and they plan to pay their Washington advocates partly in digital coins.
The firms, all based in the San Francisco area, include digital money transfer company Ripple and several startups. They’re announcing Thursday that they’ve started a coalition and are retaining the Klein/Johnson Group, a bipartisan lobby shop that specializes in technology and financial services issues.
The companies’ lobbying push comes as Congress and agencies like the Securities and Exchange Commission are trying to figure out what kind of federal rules should apply to digital tokens and the blockchain technology that underlies them. Among officials’ concerns are massive price swings in the crypto markets, a spate of fraudulent public offerings involving the coins and their use in criminal activities like drug dealing.
For their part, the fintech firms are looking for government oversight that encourages innovation and won’t impede competition in the rapidly changing global markets. They plan to weigh in with Congress as well as the SEC, the Internal Revenue Service and other agencies that touch on cryptocurrencies, said Izzy Klein, a former aide to Senate Minority Leader Charles Schumer and co-founder of Klein/Johnson.
The new group calls itself the Securing America’s Internet of Value Coalition -- a nod to an emerging notion in the financial technology world where the systems that record digital transactions will all be connected. That would enable payments across the globe to be processed almost instantaneously with no middlemen, a concept that could be revolutionary but perhaps difficult to explain to policy makers.
“We understand this is really complicated, and there is a lot of misinformation out there,” said Chris Larsen, executive chairman of Ripple. “The good news is there is a lot of interest in this topic in D.C.”
One particularly pressing matter for Ripple is whether XRP digital tokens, which are closely linked to the company, are deemed securities and subject to SEC regulation. The agency has already said that two competing currencies, Bitcoin and Ether, are not.
Along with Ripple and the independent foundation RippleWorks, the coalition also includes: Coil, a company that will facilitate digital payments for entertainment and content; Hard Yaka, an investment firm focusing on digital assets; and PolySign, a startup that is looking to be a crypto custodian.
The coalition plans to pay Klein/Johnson about $25,000 a month and 10,000 XRP. Klein said his firm will convert the XRP price into dollars when it discloses the payments on federal lobbying forms.
Larsen said it makes him feel better to have lobbyists with some skin in the game.
“It gives them some upside and gives them some risk,” he said. “Hopefully it gives them a taste of the industry in a way that hits home.”