Crypto's Lobbyist Kept Cool in a Mad, Mad Year
Kristin Smith and the Blockchain Association Are Facing Busy Agenda on Capitol Hill in 2023
By: Edward Robinson •DeFi 2022
Kristin Smith has one of the most important jobs in crypto but you may not envy her position these days.
As the executive director of the Blockchain Association, Smith lobbies for the fledgling industry in Washington, a city replete with skeptics eager to pin down the technology.
Parrying their efforts and advancing the crypto cause would be hard enough in a normal year. But normality failed to materialize in 2022.
Over the course of the last 12 months, Smith confronted a series of disasters, not to mention a bear market, that besmirched crypto’s reputation and raised existential questions about its future.
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Between Terra’s $60B collapse and Celsius’ legerdemain and the spectacular fall of FTX and Sam Bankman-Fried, Smith fought a rearguard action to make the case that decentralization remained viable and blockchain innovation wasn’t to blame for the mayhem — bad actors were.
“What happened with FTX is a failure of a centralized institution and the management of that institution not having proper values and care for customer funds,” Smith told CNBC in December. “This has nothing to do with crypto networks and the cryptocurrencies that fuel those networks.”
In interview after interview, Smith held that line. When Terra’s UST stablecoin slipped its U.S. dollar peg in May and poleaxed a fragile market, Smith went on CNN and said the situation had caused a lot of damage.
“But I think overall the underlying idea of a decentralized crypto network still remains incredibly important,” Smith said. “This is a technology that is the foundation for a new financial services system.”
Kristin Smith, executive director of the Blockchain Association
Even as Three Arrows Capital went sideways, and then Voyager Digital and Celsius, the lobbyist played it cool and stayed on message. But now comes the next challenge — legislation and regulation.
Smith, who holds an MBA from New York University, knows the terrain on Capitol Hill. She served as an aide to Republican Party lawmakers before joining the Blockchain Association in 2018.
Threat to National Security
In December, Sen. Elizabeth Warren (D-Mass.), a longtime critic, co-sponsored a bill with Sen. Roger Marshall (R-Kan.) that firmly cast crypto as a threat to national security.
The bill would apply the same know-your-customer requirements traditional financial institutions must enforce to all manner of crypto ventures, including crypto wallet providers, miner, validators, “and other network participants.” The idea is that such a law is necessary to prevent crypto from being used to launder proceeds from illegal activity and eluding U.S. sanctions.
Preserving crypto’s cherished values such as privacy, decentralization, and financial freedom won’t be easy. And with Warren, a former bankruptcy law professor at Harvard and respected authority on fiscal responsibility, leading the charge there’s a good chance the proposed legislation will pick up momentum in the next congressional session in 2023.
With the FTX spectacle bound to continue generating headlines, other members of Congress are lining up to take a bite out of crypto.
The bottom line is that tens of millions of American consumers own crypto. If Congress is going to pass something, Smith contends it’s imperative legislation not be rushed just to score points in the media.
The Blockchain Association — DeFi stalwarts Aave, Compound, and MakerDAO are among its dozens of members — will be on the front line as the wheels of Congress turn. As crazy as this year was, 2023 may pack even more drama for Smith.