Crypto Lobby Courting Friends – and Foes – at Statehouse Level – PYMNTS.com | Jewelry Dukan

Coinbase CEO Brian Armstrong’s announcement last week that he was adding a political scorecard to the top U.S. crypto exchange’s app is a pretty good indication of how much attention crypto regulatory politics has been receiving lately.

The scorecard, which assigns letter grades to U.S. senators and lawmakers, “will help our 103 million verified users learn about the crypto positions held by political leaders where they live,” Armstrong said tweeted. “Over time, we want to help pro-crypto candidates solicit donations from the crypto community (in crypto).”

It also shows how campaign funds are pouring the crypto industry into the midterm elections, led by FTX exchange CEO Sam Bankman-Fried, who has pledged at least $100 million for the 2024 election cycle and for “most” of the $31.2 million Crypto-affiliated Super PACs had issued by mid-June for the 2022 midterm election primaries, Roll Call reported.

But it’s not just Washington, DC where crypto legislation is happening and where crypto dollars (and bitcoins) are being issued to make it the way of the industry.

A localized focus

That same month, a summary of the 2022 cryptocurrency legislation by the National Conference of State Legislators found that 37 states have passed legislation or are working on legislation covering digital assets, starting with the smaller ones – Washington and West Virginia have virtual currencies under their laws Added about unclaimed property – until pretty dramatic.

Wyoming, one of the first states to seriously focus on cryptocurrency (and the first to make attracting the industry a primary focus), passed legislation affecting the regulation of Decentralized Autonomous Organizations (DAOs) running Decentralized Finance (DeFi) projects regulate.

Not all are to be taken too seriously. A 136-word Arizona bill introduced by a state senator sought to define bitcoin as legal tender in the state.

But many states are much friendlier.

On May 12, Florida Gov. Ron DeSantis, a Republican, signed legislation that two attorneys from the blockchain and digital assets practice of Greenberg Traurig, one of the top 10 law firms in the US, said “relaxed Florida’s position on virtual licensing requirements Currency activities by clarifying that a money transmitter license is only required for persons acting as an intermediary between two parties where the intermediary has the unilateral ability to execute or prevent a transaction.”

Anyone involved in bilateral originator-to-originator transactions does not need a Money Services Business (MSB) license, he added.

That comes two months after The New York Times highlighted another Florida law as part of the state’s “warm embrace of the cryptocurrency agenda” in a story about the impact of the crypto industry in state capitals. This bill, it said, “made it easier to buy and sell cryptocurrencies and eliminated a threat of an anti-money laundering law.”

Also Read: As States Scramble for Crypto Industry Dollars, the Regulatory Race to the Bottom Begins

Pushback on both coasts

On the other hand, the crypto industry is hitting walls in some larger states, notably California and New York.

In California, the Digital Financial Assets Law — a key statute that requires crypto financial services companies to obtain a license similar to New York’s hugely unpopular BitLicense — is awaiting the signature or veto of Democratic Gov. Gavin Newsom.

The Blockchain Association, one of the industry’s leading lobby groups, called it “short-sighted and unhelpful” and warned that it would “impair the ability of crypto innovators to act and drive many out of the state.”

And in New York, the crypto industry has tried and failed to stop lawmakers from passing a crypto-mining ban, which now awaits the signature or veto of Gov. Kathy Hochul — who is being applauded just as harshly.

It is also the first state where the Blockchain Association has established a lobbying operation in the capital. Its head, John Olsen, told Coindesk in March that the moratorium “has actually gained more momentum than it should have because there is no one in the industry who advocates the benefits of blockchain and crypto.”

And it’s likely to make some headway, said Jacqueline Jamin Drohan, a partner at Drohan Lee who leads the New York State Bar Association’s Task Force on Emerging Digital Finance and Currency.

In a Sept. 6 interview on the association’s website, she said that “at the state level, regulation is cumbersome.”

While BitLicense “is the standard among states, perhaps even globally…it can be unwieldy for many early-stage startups…The state needs to find a happy medium as it looks to grow its digital currency footprint and attract businesses — particularly in New York City — and bring them here to headquarters.”

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