



Lobbying in the US is a multi-billion dollar industry. From environmental sustainability to gun rights, every significant political interest group has its own group of lobbyists. Many are paid by political action committees, or PACs. These committees pool contributions from their members to support political campaigns.





That's why crypto-Twitter was abuzz with speculation over the weekend, after documents for Coinbase's new PAC were released last Friday.





"Politicians have been anti-crypto because they didn't personally benefit," tweeted one account. "With @coinbase establishing a PAC, they'll have big #crypto dollars coming to their coffers...which should lead to beneficial laws."





While Coinbase’s PAC is a significant step for crypto-advocacy -- it can raise money and donate directly to various politicians -- it’ll take some time for it to actually make an impact. Some of the top-spending PACs in the US have been around for years, if not over a decade, and thus have been able to build large support bases, and can raise and spend millions of dollars every year.





ActBlue, for instance, a PAC that funds Democratic campaigns, spent more than US$671 million from 2017 to 2018 and has been raising funds since 2004. Coinbase’s PAC currently has zero funds, though that will probably soon change with mid-term elections coming up this November.





Coinbase's PAC is also not a so-called "Super PAC,” which means it can’t throw an unlimited amount of money at the cryptocurrency cause, though it can fund candidates directly. In Coinbase's case, donations to political committees and candidates are capped at US$2,700 per candidate per election.





The crypto exchange’s PAC is also considered a separate segregated fund (SSF), which is a PAC that’s “established, administered or financial supported by a corporation” (in this case, Coinbase Inc.). That means that Coinbase can’t solicit contributions from just anyone, only individuals who “have specific relationships with the connected organization (i.e., stockholders or members and certain employees of the connected organization and their families),” according to the Federal Election Commission.





That is not a huge restriction, since there are many wealthy individuals connected to Coinbase. According to Forbes, the crypto net worth of Coinbase CEO Brian Armstrong is around US$900 million to US$1 billion. However, it does mean that donors outside of Coinbase’s immediate network will not be able to contribute to its PAC, which may add to concerns that Coinbase’s PAC will promote the exchange’s interests, and not those of the wider community.





This isn’t the first time that companies in the cryptocurrency industry have put money behind politicians in Washington. According to OpenSecrets, a database that tracks federal campaigns donations and lobbying data, Ripple Labs (a blockchain-based payment provider) spent US$280,000 on lobbying between 2015 and 2018. Coinbase has also spent money on PACs in the past. In 2014, the exchange donated about US$3,000 to Bit PAC, a PAC created to support pro-Bitcoin political candidates.





It remains to be seen what kind of candidates Coinbase’s PAC will back, and how effective its crypto-lobbying will be. But as Coinbase starts moving into more regulated businesses, such as custodial services for institutional investors, it’ll need all the support it can get.











