The price of bitcoin may be down, compared with last year's meteoric heights. But industry officials aren't waiting for the next spike in investor demand to launch a charm offensive targeting federal lawmakers and regulators who've taken an interest in cryptocurrencies.
Tech veterans and a number of high-profile cryptocurrency companies on Tuesday said they are forming the Blockchain Association, the first fully fledged lobbying group in Washington representing entrepreneurs and investors who are building off the technology behind bitcoin.
Joining the initial push are companies such as Coinbase and Circle, which operate some of the world's most popular virtual currency exchanges, as well as the technology start-up Protocol Labs. Investors, such as Digital Currency Group and Polychain Capital, are also among the founding members.
The group has already made its first hire: Kristin Smith, who was an aide to then-Sen. Olympia J. Snowe (R-Maine) and went on to lobby on blockchain issues for Overstock.com, the online retailer that in 2014 began accepting payments in bitcoin.
"I've been spending a lot of time doing a lot of the basic education work in this space,” said Smith, who is expected to guide the trade group through its early steps. “I'm excited to focus exclusively on these issues."
Policymakers have been confronted in recent months with an array of cryptocurrency issues as investors have flocked to bitcoin and other virtual currencies. The technology on which they're based raises novel questions about financial regulation in a digital age — and in some cases, consumers have become the victims of scams that have attracted attention from state and federal regulators. Congressional hearings on cryptocurrency and recent decisions by the Securities and Exchange Commission have also highlighted bitcoin's and other cryptocurrencies' growing profile.
The Blockchain Association aims to become the cryptocurrency industry's top lobbying organization in Washington on policy issues, portraying itself as a voice for mainstream companies that want to work within the political system rather than circumventing it — as companies such as Uber and Airbnb have done in the past.
Among its first priorities will be addressing how cryptocurrencies are treated under U.S. tax law, and explaining to policymakers how anti-money-laundering and know-your-customer regulations apply to the industry.
"The Blockchain Association is an effort to get the preeminent companies in the space together so [policymakers] know they're hearing from companies that welcome regulation when it’s appropriate,” said Mike Lempres, Coinbase's chief legal and risk officer. “We’re not companies looking to game the system, but trying to develop a legal and regulatory system that’ll stand the test of time."
This isn't the only time blockchain advocates have sought to play the Washington influence game. Half a decade ago, organizations such as the Bitcoin Foundation played a similar role. But it was a catchall organization — representing industry as well as individual consumers; acting as a think tank, lobbying group and standard-setting body, all in one.
Now, the cryptocurrency field is far more developed, with distinct sectors and interest groups, said Jerry Brito, executive director of the Coin Center, a Washington-based cryptocurrency think tank. To see the rise of a purpose-specific trade group is a sign of the industry's growing maturity, he added.
"We’re happy to see this organization stand up,” Brito said. “It’s good to have more voices advocating for things we agree about. But probably more importantly for us, a lot of folks project 'trade association' onto Coin Center, and we're decidedly not that. When we get questions about the industry, we can send them to these folks."