Cryptocurrency lobbyists were riding so high in early 2022 that an FTX executive felt comfortable emailing Jerome H. Powell, the chairman of the Federal Reserve, directly to ask him to meet with Sam Bankman- Fried, the soon to be disgraced founder of the cryptocurrency exchange.
It worked.
“The day that will work for me is February 1,” Mr. Powell responded in a Jan. 11 email from Mark Wetjen, an FTX policy officer and former commissioner at the Commodity Futures Trading Commission.
Mr. Powell’s public calendar shows that he and Mr. Bankman-Fried met as planned. And Mr. continued. Wetjen sent the Fed chair two policy papers recently published by FTX, according to emails obtained through a public records request. “Hope you find these useful!” Mr. wrote Wetjen. “It’s great to have people like you serving our country.”
Mr. has been careful for a long time. Powell about the digital currency industry, but, like many in Washington, he’s trying to learn more. FTX is eager to do the teaching. According to newly released records, Mr. Wetjen gained access to a range of federal officials. The records show that Mr. Bankman-Fried secured a virtual meeting in October 2021 with another top Fed official, Lael Brainard, now director of the White House National Economic Council. And public calendars show that Mr. Bankman-Fried meet with another top financial regulator, Martin Gruenberg, head of the Federal Deposit Insurance Corporation.
The crypto industry is facing a tougher landscape in Washington after the collapse of FTX last fall. Mr. Bankman-Fried was arrested on fraud charges in December, and her trial is scheduled to begin Tuesday. The industry is also facing a widespread government crackdown that has sent some crypto entrepreneurs abroad in search of friendlier governments.
Companies that survived the crypto crash are still pouring millions of dollars into lobbying, but they’re finding it harder to gain access to the halls of power. Some congressional offices have been reluctant to meet with industry representatives. Crypto lobbyists appear less often on the public calendars of key officials in regulatory agencies, and companies have had to shift strategy, trying to differentiate themselves from FTX.
“There was a group of people who had trouble having meetings,” said Sheila Warren, who runs the Crypto Council for Innovation, an advocacy group. “I’ve heard from some offices that they won’t be seeing some people anymore.”
In the approaching test of Mr. Bankman-Fried, the crypto industry is working hard to change the subject from FTX.
Stand With Crypto, a nonprofit backed by digital currency exchange giant Coinbase, plans to hold a “fly-in” on Wednesday, bringing in industry players from around the country to speak with lawmakers.
“It’s been quieter — and more cautious, in some respects — but the pushback from the industry hasn’t subsided,” said Mark Hays, who tracks cryptocurrency regulation at Americans for Financial Reform. “The crypto industry knows its star has been tarnished on Capitol Hill, to some extent.”
The mood in Congress was more friendly to the industry in early 2022, when FTX was at its peak: Mr. Bankman-Fried is positioned as a kind of wunderkind, eccentric and brilliant. But since its collapse, many lawmakers have argued that the industry should be regulated more strictly.
“The tone has definitely changed among Democrats — they’re more skeptical,” said Bart Naylor at Public Citizen, a government watchdog that tracks cryptocurrency lobbying.
Regulators are more hesitant to embrace crypto firms even in 2022. It is unusual for FTX to meet directly with the Fed chair.
Mr. Powell’s only other listed private sector meetings in February 2022 were with Jane Fraser, the chief executive of Citigroup; David Solomon from Goldman Sachs; Suzanne Clark from the US Chamber of Commerce; James Gorman, the chief executive, and Tom Wipf, a vice chair, from Morgan Stanley; Jamie Dimon, the chief executive of JPMorgan Chase; the Business Council, a group of chief executives; and the head of Singapore’s sovereign wealth fund.
Mr. met Powell to other financial technology companies — he spoke with a representative from payment processor Stripe in March 2022, for example. But he has not listed similar meetings in 2023, based on his calendars released to date.
At the meeting with Mr. Bankman-Fried, discussed by Mr. Powell and FTX officials are stablecoins as well as central bank digital currencies, a form of government-backed electronic cash, said a person familiar with the matter.
Mr. knows Wetjen has many of the agency officials with whom he sets up meetings from his previous policy role in Washington. He and Mr. Powell worked together on regulatory issues while Mr. Powell is a Fed governor, for example.
Dennis Kelleher, the head of regulatory watchdog Better Markets, said FTX wielded a wide web of influence in wider regulatory circles, partly through Mr. Wetjen.
“This is the problem: These relationships, which are invisible to the public, pay dividends year after year once these people walk through the revolving door,” Mr. Kelleher said. FTX has also flooded Washington with money, helping it gain ground in congressional offices and think tanks, he and some lobbyists say.
The Fed did not comment for this article, nor did Mr. Wetjen. The White House had no comment on Ms.’s meeting. Brainard to Mr. Bankman-Fried. An FDIC spokeswoman noted that agency chairs often conduct courtesy visits with financial firm leaders.
In 2022, FTX is trying to shape how it is regulated by the Commodity Futures Trading Commission, as Mr. Wetjen to Mr. Powell in an email from May.
“We have an application before the CFTC that lays out for the agency how to do this,” Mr. Wetjen about the FTX configuration. “All the CFTC has to do is approve it.”
The Fed has little control over such matters, but Mr. Powell sits on the Financial Stability Oversight Council, an interagency regulatory body that includes the director of the Commodity Futures Trading Commission.
Mr. continued. Wetjen: “As far as the crypto industry coming out of the discussions” at the Financial Stability Oversight Council, “we want you to have this context and our views on FTX.”
The company clearly failed to make much progress with the Fed chair. Mr. Powell supported an October decision by the Financial Stability Oversight Council in further study the kind of setup that FTX and other trading platforms want for crypto asset exchanges, instead of greenlighting it.
Now, the demise of FTX has only strengthened the arguments of regulators who want to get closer to crypto firms. This year, the Securities and Exchange Commission sued Coinbase and Binance, FTX’s two biggest competitors, amid a broader government crackdown. When Mr. was not in the picture. Bankman-Fried, other financial technology companies are spending millions to ensure that future regulatory oversight is in their favor.
Mr. Hays of Americans for Financial Reform said the industry was largely avoided in Washington, because “money talks.”
“I think they’re still opening doors.”
