Crypto Industry Helps Write, and Pass, Its Own Agenda in State Capitols

In Florida, a bill that makes buying and selling cryptocurrency easier passed last month after collaboration with the crypto industry.Credit…Octavio Jones for The New York Times TALLAHASSEE, Fla. — The debate took less than four minutes.

In the Florida House last month, legislators swiftly gave final approval to a bill that makes it easier to buy and sell cryptocurrency , eliminating a threat from a law intended to curb money laundering. One of the few pauses in the action came when two House members stood up to thank crypto industry “stakeholders” for teaming with state officials to write a draft of the bill.

“Whether you’re Binance or Ethereum, Dogecoin or Bitcoin, this is a great bill,” said Representative John Snyder, a Palm City Republican, referring to crypto exchanges and coins.

Shortly afterward, the House voted unanimously to pass the measure . The Senate followed , sending the bill to Gov. Ron DeSantis for his signature after 75 seconds of deliberations.

Florida’s warm embrace of the cryptocurrency agenda is just the tip of an aggressive industry-led push to position states as crypto-friendly beachheads. Across the nation, crypto executives and lobbyists are helping to draft bills to benefit the fast-growing industry, then pushing lawmakers to adopt these made-to-order laws, before moving rapidly to profit from the legislative victories.

The effort is part of an emerging national strategy by the crypto industry, in the absence so far of comprehensive federal regulatory demands, to work state by state to engineer a more friendly legal system. Lobbyists are aiming to clear the way for the continued explosive growth of cryptocurrency companies, which are trying to revolutionize banking, e-commerce and even art and music.

Many states are racing to satisfy the wish lists from crypto companies and their lobbyists, betting that the industry can generate new jobs. But some consumer advocates worry that this aim-to-please effort could leave investors and businesses more vulnerable to the scams and risky practices that have plagued crypto’s early growth.

In Florida, the new money-transmission legislation emerged from a monthslong collaboration between Representative Vance Aloupis Jr., a Republican of South Miami, and Samuel Armes, who is starting a cryptocurrency investment firm, Tortuga Venture Fund.

“Vance has been an incredible asset to the blockchain and crypto community,” Mr. Armes said.

Similar teamwork has been on display in Wyoming, North Carolina, Illinois, Mississippi, Kentucky and other states, according to a New York Times review of state legislative proposals and interviews with legislators and their industry allies.

At least 153 pieces of cryptocurrency-related legislation were pending this year in 40 states and Puerto Rico, according to an analysis by the National Conference of State Legislatures. While it was unclear how many were influenced by the crypto industry, some bills have used industry-proposed language almost word for word. One bill pending in Illinois lifted entire sentences from a draft provided by a lobbyist .

In New York, at least a dozen industry players have hired lobbyists over the last year — including Blockchain.com, a crypto exchange, and Paxos, which is trying to set up a national crypto bank — collectively spending more than $140,000 a month , state records show.

The state proposals include bills to exempt cryptocurrency from securities laws intended to protect investors from fraud. Other legislation, such as in Florida, would exclude certain cryptocurrency transactions from money-transmission laws enacted to curb money laundering. Some would take even more radical steps, as in Arizona, where one legislator wants to declare Bitcoin legal tender so it can be accepted to pay off debts.

“Legislators want to be on the cutting edge, on the side of something new,” said Kristin Smith, executive director of the Blockchain Association, a Washington group that represents the industry. “We want to cultivate more champions.”

The moves have alarmed current and former financial regulators like Lee Reiners, a onetime supervisor at the Federal Reserve Bank of New York, who is now at Duke University law school. He raised objections last year before North Carolina passed a bill exempting certain experimental cryptocurrency start-ups from the state’s consumer protection laws.

“States are being convinced you have to do this if you want to be competitive, so they’re rolling out the red carpet for crypto firms,” he said. “There’s no one pushing back saying there are big risks here to your citizens, of money laundering, consumer fraud and tax evasion.”

State legislators, many of whom have limited background in financial regulation, said they had little choice but to rely on industry experts, given the complexity of the crypto marketplace.

About two years ago, Jason Saine, a state representative in […]

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