For more than a decade, those worried about the reputation of parliament have warned that all-party parliamentary groups (APPGs) can be a problem.
Their supporters say they are a place for like-minded parliamentarians to discuss topics of special interest. But despite their unofficial nature, and with no formal role in the legislative process, APPGs can be a magnet for those who want to get close to MPs and peers – or to pretend that they are for the sake of polishing their reputations.
This means that a number of lobbying and spying scandals have touched APPGs in recent times, including the lawyer heavily involved in the Chinese in Britain APPG who is accused accused by security services of being an agent of Beijing.
The case of Phoenix Community Capital is an example of how a company sought to gain credibility for its project by associating itself with APPGs and parliamentarians.
Within the cryptocurrency sector, the attempt to persuade lawmakers that the unregulated industry should be taken seriously is a growing trend. Companies and lobbying firms have poured an estimated £250,000 into APPGs with links to the controversial new financial industry in the past five years.
MPs say the scale of lobbying by firms linked to crypto and the blockchain technology behind it has increased exponentially in recent times as the industry comes under scrutiny in the wake of the collapse of FTX in the US and pressure in the UK for some degree of regulation.
Over the past year, the value of many cryptocurrencies and associated companies has plummeted, with small-scale investors often left counting the cost. With more than 2 million people invested in crypto in the UK, the government is now making moves to regulate the sector, but sceptics of digital currencies argue against giving them regulatory legitimacy.
With the debate about regulation continuing, at least six APPGs with links to crypto companies have sprung up since 2018, while a number of major firms have hired peers to sit on their boards, including the former culture minister Ed Vaizey, who advises Binance, once a competitor to FTX, and Jo Johnson, an ex-education minister, who worked for Bifinity until December. Philip Hammond, the former chancellor, is chair of a Mayfair-based cryptocurrency trading firm, Copper.co.
A number of competing lobbying groups have also formed in recent years. One of them held a free drinks party for all parliamentary staff of MPs before Christmas, and another, CryptoUK, has become one of the main industry bodies. Its representative, Ian Taylor, told a recent parliamentary inquiry into crypto assets that its staff “spend a lot of time here in parliament educating MPs and members of the upper house”. It provides the secretariat for the APPG on crypto and digital assets, which is undertaking its own inquiry into how the sector should be regulated.
The burgeoning lobbying industry around cryptocurrency trading and associated technologies is typical of a sector in its infancy, where the nature and strength of regulation is still to be determined.
The Treasury is consulting on bringing it under financial services regulation for the first time, saying earlier this month that it would “robustly regulate crypto asset activities – providing confidence and clarity to consumers and businesses alike”.
What policymakers will need to watch is how the industry behaves during this public consultation – and whether there are attempts to influence the process via the back door of APPGs and friendly MPs at the same time.
