Coinbase makes Washington hot

Hello and welcome to the FT. This week we are all merged and want to take a look at the lobbying of a crypto to get what she wants from Washington.

Coinbase was a lot in his short life: crypto grown up, symbol of increasing self -confidence in the industry and its hybris, to expand too quickly. She also plays a role as her leading public lobbyist.

This week, the US exchange for digital assets introduced a function in its app that evaluates members of the congress according to their crypto friendliness, based on what they said in public.

"Over time, we want to help Pro crypto candidates to ask for donations from the crypto community [in Crypto]," explained Brian Armstrong, founder and CEO of Coinbase, in A series of tweets . "The crypto community is much larger than Coinbase-hopefully we can all gather to engage elected guides and to promote a reasonable policy."

If you thought that Coinbase was the company that publicly explained two years ago that his corporate culture would discourage political concerns, you are right. Armstrong has informed the apparent contradiction: "I said you should keep out of politics that has nothing to do with our mission."

to what extent employees have to work towards the political goals of a company is an important topic, but for another time. For the moment it is worth emphasizing how unusual this is.

Some advocates of interests lead sentiment scores to civil servants and their attitude on sensitive topics such as weapon control or environmental issues and publish the results when the elections are noun. It is extremely rare for a private company to apply such a tactic. There is also no guarantee that it will achieve its goals.

For the cryptom market, dealing with Washington is a bit like entering a foreign world. The original WhitePaper from Satoshi solved a mathematical problem that had been concerned with digital cash for years, but was also a political document that encouraged supporters to bypass and delivered a draft for a corresponding currency. Contempt for Washington and Banks is a characteristic of cryptoculture, and the word is spread through social media, especially Twitter.

The industry learns that the attempt to avoid regulation is unsuccessful. According to Public Citizen, the consumer protection group, the number of lobbyists who supported the cryptocurrency supporters almost tripled in three years, from 115 in 2018 to 320 in 2021. The biggest crypto lobby donors were Coinbase, Ripple Labs and Blockchain Association, which spent more than $ 2 million In addition. Nevertheless, it still has a lot to do to reach the expenses of many other industries.

Coinbase may want to help Pro crypto candidates, but the flip side of the tactic is that it exerts pressure on the more skeptical civil servants. This pressure would probably be exercised through social media, the preferred weapon of the industry. Channels like Twitter, about which Armstrong has advertised for the Scorecard, life of anger and emotions.

This was done a year ago when Senator Rob Portman inserted a controversial provision to report crypto trades to the tax authorities in the bidding law of the bidding law of $ 1 trillion.

The thing is that the efforts of the industry to remove the clause have failed. "Washington is not influenced by social media as the private market," said Charley Cooper, Managing Director of the Blockchain software group R3 and someone with more than 25 years of experience in Beltway. It is still worth meeting personally or going to a beer to discuss problems. "It plays according to an older set of rules," he said.

elsewhere in Washington there is a struggle between the Commodity Futures Trading Commission and the Securities and Exchange Commission to convince the authorities who should be the most important US regulatory authority for crypto.

The CFTC looks like it is winning the race. The chairman, Rostess Behnam, convinces in a skillful way that matters by providing information and solving problems by explaining things to face to face Washington. The different reception that he and his SEC colleague Gary Gensler learned from the senators during their respective hearings this week was striking. Gensler had a much rougher journey.

The crypto industry is that the CFTC is also its main regulator, but if its wish is fulfilled, this could be the case despite its efforts and not because of them.

Do you have some thoughts on this topic? Send me an email to philip.stafford@ft.com

The Highlights of the Week

• The brother of a former coin base employee was guilty of charges for conspiracy for wire fraud in a precisely observed case, which was about allegations of insider trade on cryptoma markets.

• A South Korean court issued an arrest warrant against Do Kwon, the co-founder of the collapsed cryptocurrency operator Terraform Labs, due to suspected violations of capital market regulations after the $ 40 billion-dollar implosion.

• The global banking supervisory authorities in Basel said they were aiming to complete a framework for capital regulations that covers banks that want to keep and act digital assets on behalf of customers by the end of the year.

• Some of the biggest trade names of Wall Street, including Charles Schwab, Citadel Securities, Virtu Financial and Fidelity Digital Assets, support a new crypto exchange called Edx Markets that promises "more secure, faster and more efficient" trade in digital assets for US individual trade and institutional investors.

• One last thing: Do not miss the renamed newsletter Future of Money, the FT guide to the drives of the FinTech sector. Receive expert reports and analyzes every Monday for the convergence of technology and banking. Register here.

Soundbite of the week: Vitalik Buterin praises the success of the fusion

"The Merge symbolizes the difference between Ethereum in the early stages and the Ethereum, which we always wanted."

finally happened and there was no singularity that changed human civilization. The merger could turn out to be a serious date in computer history. Likewise, it could hardly be more than a footnote in the history of Ethereum. Last but not least, it consumes less energy and many people are happy that a complex and tedious IT project went smoothly. But now it means that Ethereum supporters have less excuse if it is not quite as revolutionary as hoped.

data mining

If you act with crypto, how do you go on something like the merger? It is a fundamental event that takes place at a (fairly) known time that is generally assumed that it is advantageous when everything goes well, but has the potential to hunt the architect.

An approach is to turn to the derivative market that enables you to place bets on future price development. My colleagues Laurence Fletcher and Josh Oliver went through many of the strategies; Going the long, going to short positions, buying rumors, selling messages.

his success did not mean good news for those who rely on the price of ether, the native token of Ethereum, which fell 9 percent in the following 24 hours. Kaiko Research data above Deribit showed that many call options were placed, the price of which would exceed $ 5,000. As Kaiko found, Ether would have to more than triple to achieve this point, and so it seems that these options are expired.

that was for this week. Scott Chipolina will sit in the hot chair again next Friday. Have a nice weekend!