More Crypto Lobbying – FOMO Ads – Merger Control – POLITICO

by Arthur · April 27, 2023

Press play to listen to this article

Spoken by artificial intelligence.

A weekly newsletter about campaigning, lobbying and political influence in the EU.

By BJARKE SMITH-MEYER

Tips, stories, traumas to @bsmithmey or [email protected] | View in your browser

welcome to this week’s Influence newsletter which I have the pleasure of handling in Sarah’s absence. But fear not! She will be back with you next week. We’ve met once before – last summer, actually. And I’m here to give you another taste of the crazy crypto world I cover. Hold fast!

Table of Contents

CRYPTO-LOBBY BUILDING

INCREASING CRYPTOCOAXING: Last year was a tough year for the crypto industry as it went through a severe downturn. But that didn’t slow down lobbying — if anything, it pushed it into overdrive. Spending on crypto lobbying in 2022 more than doubled compared to the previous year, reaching a new high of $25.5 billion in the United States. That’s remarkable considering how when we last spoke in August, the crypto market had seen two-thirds of its value evaporate into thin air. air.

The crypto market hasn’t gotten much better since. The world’s third largest crypto exchange FTX collapsed in early November after it emerged that client cash had been used to make risky bets elsewhere. The exchange’s collapse was not only a shock to the cryptosystem, but also highly embarrassing to US lawmakers who had seen it as the respectable face of a controversial market. The scandal particularly burned some Democrats after they had accepted FTX campaign money for the midterm elections.

Best defense is attack: US crypto exchange Coinbase led spending on lobbying, according to a recent report by India-based The Money Mongers, which describes itself as an independent crypto think tank. The report found that Coinbase, which is making a big push into the European market, hired 32 new lobbyists in the US last year and spent more than $3.3 million. That’s half the lobbying spending of the Blockchain Association, which came in second with $1.9 million. Coinbase’s rival exchange Crypto.com came in sixth, at $1.18 million. Even FTX spent $720,000 on lobbying before it collapsed – and that’s not accounting for its political donations!

FOMO ADS

GET THE MESSAGE OUT: Financial regulators are scratching their heads over how to control online advertising for risky financial products and cryptocurrencies. Crypto exchanges are watching this area with bated breath after perfecting a marketing strategy that exploits people’s fear of missing out. The message is quite simple and as old as the hills: Convince people that they need to get on the gravy train before it leaves the station.

Fans and jocks: If you’re a sports fan, you’ve definitely seen these ads. And that is no coincidence. Research shows that sports fans and jocks are the most likely types to buy crypto… which explains why many crypto exchanges have put their name on stadiums and competition posters, such as the soccer World Cup.

The ads are deliberately vague and make very little reference to the services or products they sell and deliver. The defunct exchange FTX ran for last year’s Super Bowl is a good example.

Ring fence: There are no hard and fast rules to regulate crypto advertising – some EU countries have introduced laws on crypto ads, but most do not. Sports sponsorship tends to involve limited agreements with an event organiser, rather than a specific country. So a deal with the FIFA World Cup in Qatar is not about advertising to local Qataris, but securing brand recognition for a one-off event – a convenient loophole.

Outdated rules: The legal gray area here is in what regulators call “reverse solicitation,” which is when people go out of their way to solicit the services of a company based and regulated outside their borders. EU regulators draw the line if a foreign firm actively markets its products and services across the bloc without adopting local safeguards that protect European citizens from fraudsters.

It worked fine in the old world of telephones and financial brokers who could advise people on which foreign firms to approach; not so much in the online world.

Solution comes: EU lawmakers last year agreed on a crypto rulebook, called MiCA, which will require the bloc’s securities regulator to develop new guidelines for how foreign companies can serve EU investors. Lawyers expect them to be strict. Read the whole story here.

CONNECTION CONTROL

SMALL WORLD: The world of competitive economists is relatively small, dominated by a handful of consulting companies – Compass Lexecon, Charles River Associates, RBB Economics and NERA. They are often called in to analyze markets to show the potential effects of a deal or a company’s behavior. So often, in fact, that merger officials can be inundated with spam in the form of financial contributions — “a strategy that exploits the regulator’s limited administrative capacity,” a group of academics said in a paper published last week.

Quantity over quality: The paper flags “significant increases” in submissions of merger cases and the number of financial consultants hired by merging parties. It also links the increase in submissions to a drop in quality, which it says is “another indication of spamming – seeking to overwhelm rather than inform.”

Conflicts of interest: The paper criticizes the anonymization of academic experts, “which increases the likelihood of undisclosed conflicts of interest.” It suggests regulators could issue guidelines for consultancies’ conduct, including a professional code and monitoring system, similar to how lawyers must deal with potential conflicts.

Opens up: The Corporate Europe Observatory, a lobbying and transparency campaign group, is calling for financial consultancies to join the EU’s transparency register. It also wants the European Commission’s antitrust division to disclose more about the filings it receives and address revolving door issues with staff.

Case in point: Yale professor and a former chief economist at the US Department of Justice Fiona Scott Morton is set to become the EU’s new chief economist, three people have told POLITICO. Scott Morton has previously advised Amazon and Apple.

OMBUDSMAN REPRESENTS OMBUDSMAN

INVESTIGATION OF THE DEFENSE FUND: EU Ombudsman Emily O’Reilly asked the Commission to offer more transparency about the role of external experts who give the green light to projects under the €8 billion European Defense Fund. The EU’s executive arm has yet to respond to a letter from O’Reilly, who asked how the commission can respect the EU’s ethical guidelines and protect against conflicts of interest that may arise from such experts.

The ombudsman pointed out that these experts’ names are nowhere to be found – which is unusual by EU standards and undermines public scrutiny, in her view. “We envision that this over the coming years [defense procurement] is going to be an even bigger topic […] so it’s very important that conflicts of interest are identified,” O’Reilly told reporters Tuesday after the ombudsman’s annual report was published.

More Pfizer questions for VDL, please: O’Reilly also lamented the apparently waning interest of journalists in Commission President Ursula von der Leyen’s mysterious text messages about vaccine purchases with Pfizer CEO Albert Bourla — though POLITICO has continued to follow up on the controversy.

“President VDL is out there, she is a public figure […] but there has never been an opportunity to ask her directly: “What about the text messages?”, said the ombudsman. “I noticed there was a big article, an interview with her [von der Leyen] at the Financial Times, where the text messages were not even mentioned.” Ouch.

Redundant Communication: So you are in a consulting company that handles communications for a company or organization? Then make sure you don’t add to journalists’ work – or inbox clutter – both of which can be mind-numbing as it is. That includes: not asking for a list of questions several weeks before an interview; not send and resend PR and follow-up emails without researching the topics journalists actually cover; and last but not least, do not forward press releases the journalists have already received directly from the company. We guarantee journalists will like you better for it.

INFLUENCE

THE EU COMMISSION

– Rose Domenech Amado has been appointed director of One Health in the commission DG health and food safety.

— Elena Kostadinovathe legal lead behind the Commission’s upcoming proposal on standard essential patents, has left DG GROW to join the Smart and Sustainable Growth Department at DG for regional and urban policy.

– Penelope Papandropoulos has become the boss of DG COMPits unit for data analysis and technology. Until very recently, she was a close adviser to the EU’s antitrust chief Margrethe Vestager and previously worked for her predecessor, Spain’s Joaquín Almunia.

— Marietje Schaakea former Dutch MEP, tweeted that she has been appointed as a special adviser to CommissionAntitrust chief Margrethe Vestager “with a focus on geopolitics and technology”.

– Maria Tsoni leaves Commission spokesperson after more than six years to become legal and policy officer DG Communications Networks, Content and Technologyin the unit that works with the implementation of the Act on Digital Markets.

INDUSTRY

— Sophie Carsten Nielsen leaves the Danish Parliament to become Bio Project Director for Danish Confederation of Industrystarting in Brussels from 1 May.

TRADE

— Matthijs Geuze has joined specialist lobby law firm Alber and Geiger as senior partner.

TECH

— UBER HIRE: Ride chat platform Uber want to hire one legal advisor on EU affairs, based in Amsterdam.

— Stephen Turnerthe former Brussels chief lobbyist for Twitter, has joined PlayStation. He will lead the company’s public policy team for Europe, the Middle East and Africa.

— Meanwhile, Twitter’s former head of lobbying for Europe Ronan Costello also announced that he will work for Reddit starting next month.

— Philippe Regnardwho spent three years as Huaiwei’s head of public policy and government affairs, has started his own tech public affairs consultancy called Tech Publica.

TRADE

—Siobhan Kahman will become a partner at CMS Brussels‘ competition and trade teams from 1 May.

DECISION INFLUENCE

— Mark Dempsey has joined the non-profit organization ARTICLE 19who fights for freedom of speech and expression, as a senior advocate.

Great Britain

– BARBERSLIFE: The UK Secretary of State for Science, Innovation and Technology, Michelle Donelanplanning a “short” maternity leave of around two months. Chloe Smiththe former Secretary of State for Labor under Liz Truss, will act as interim.

THANKS TO: Aoife White, Gregorio Sorgiproducer Fiona Lally and my editor Sonya Diehn.