Crypto Cash Fuels Kyrsten Sinemas’ Reelection Campaign

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After leaving the Democratic Party last year, Kyrsten Sinema will run for re-election to the US Senate as an independent in 2024, according to a Wall Street Journal report earlier this month. In her bid for re-election as senior senator from Arizona, Sinema faces a stark approval rating in her home state and will have to fend off a challenge from Democratic Rep. Ruben Gallego, who has issued an aggressive challenge to the incumbent.

In a hyperpolarized state, winning as an independent could be daunting. But Sinema has amassed a hearty war chest, thanks in part to six-figure contributions from crypto stakeholders pouring in since she joined a congressional caucus that sought to explore issues that would affect their industry.

The crypto industry boon completes a two-year arc for Sinema, which has gone from being a supporter of regulations that some crypto giants opposed to a force of compromise with the industry. Relaxed regulatory legislation fell by the wayside, although Sinemas crypto donations continued to pour in.

There’s not much money in being a crypto skeptic.

Over the past three years, Sinema has raised nearly half a million dollars from crypto businesses and investors. In 2021, as her stance on crypto regulation eased, she raised at least $175,000 in campaign cash from the industry. Between 2022 and 2023, his campaign received over $330,000 from crypto companies and businesses with crypto assets.

There’s not much money in being a crypto skeptic, said Mark Hays, senior policy analyst at Americans for Financial Reform and Demand Progress.

Some of the biggest contributions to the Sinema campaign over the past four years have come from employees of huge private equity firms who began investing heavily in crypto and blockchain technologies as the formation of the new Sinemas caucus. These include Apollo GlobalManagement and Andreessen Horowitz, both of which have launched crypto funds worth hundreds of millions.

According to the latest financial disclosures from Sinemas, fundraising from crypto-aligned interests is not slowing down. Donald Trump’s spokesman-turned-cryptocurrency evangelist Anthony Scaramucci donated $6,600 to the Sinemas campaign in February, despite a large loss from the implosion of crypto exchange FTX. last year. (Scaramucci remains confident in crypto.)

I’m not one of those religious figures who is going to sing Bitcoin ber alles no matter what happens in life, Scaramucci said earlier this month. So I want to frame it from that perspective and then tell you that I’m more optimistic now than I’ve ever been.

Financial Innovation Caucus

At its inception, the trajectory of Sinemas’ crypto caucus was not set in stone. In May 2021, Sinema and Sen. Cynthia Lummis, R-Wyo., launched a coalition to support financial innovations, including blockchain technology and central bank digital currencies, to promote financial inclusion and opportunity for all. .

The Financial Innovation Caucus has nine members, including Sinema, Lummis, six Republicans and Sen. John Hickenlooper, D-Colo. (The caucus website still lists Sinema as a Democrat.)

The caucus sprang into action during a congressional debate on the bipartisan infrastructure bill in August 2021. Sinema with Sens. Rob Portman, R-Ohio, and Mark Warner, D-Va. proposed an amendment that would have strengthened cryptocurrency reporting requirements by reducing certain exemptions.

The amendment was backed by the White House but drew immediate criticism from the cryptocurrency industry, which preferred an alternative proposal that would have relaxed reporting requirements. The president of the Blockchain Association, a trade group that champions the future of crypto, called the Sinema Amendment terrible. A spokesperson for Andreessen Horowitz, a venture capital firm that launched a $2.2 billion crypto fund in June, said the proposal would be a staggering loss for America.

Several days later, Sinema and his co-authors of the amendment shared some of the crypto industry’s concerns. Sinema, Warner, Portman, Lummis and former Sen. Pat Toomey, R-Pa., announced they had compromised on a proposal to exempt certain groups like software developers and crypto miners from the requirements of improved reporting. Both the Blockchain Association and the White House backed the compromise, but the bill failed in the Senate.

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The goal was to advance bipartisan infrastructure law, a spokesperson for Sinema told Intercept. Working with the White House, we have found a way forward so that the bill is not held up or derailed due to separate cryptocurrency issues from a few senators.

The spokesman took issue with characterizing Sinemas’ revised bill as a more flexible settlement proposal. The amendment does “not relax reporting requirements,” the spokesperson said. It clarifies who a broker is so that people who are not actually brokers and cannot meet reporting requirements are not subject to reporting.

As Congress debated competing amendments in the third quarter of 2021, employees of crypto companies, along with venture capital and investment firms holding nascent crypto holdings, contributed more than $175,000 in total to committees. Sinemas’ congressional campaign campaign, which raised $2 million this quarter.

These donors include employees of Andreessen Horowitz, in addition to Apollo Global Management, a private equity firm that began offering crypto services in October 2022. Apollo would become the campaign committee’s second-largest donor base. of Sinemas between 2017 and 2022.

Sinemas’ Congressional campaign committees received more than $51,000 from Andreessen Horowitz and Apollo. The $24,200 she received from Andreessen Horowitz employees, including one from co-founder Benjamin Horowitz, came mostly from employees who had not previously contributed to her campaigns.

His campaign also received $27,300 in mostly maxed-out contributions from Apollo employees, including chief operating officer Stuart Rothstein. Apollo employees had contributed to his campaigns in previous years, but less frequently and in smaller amounts. In 2022, the Sinemas campaign received over $151,000 from Apollo employees.

Crypto scrutiny

In the summer of 2022, as the cryptocurrency industry came under increasing scrutiny amid layoffs and failed pilot projects, industry executives found support consistent with Sinema and his colleagues in Congress. Sinema was the sole co-sponsor of the Toomeys July 2022 Virtual Currency Tax Fairness Act, which would have exempted small personal crypto transactions from tax and was widely celebrated by the industry.

Last August, Sinema and his colleagues reintroduced an identical version of the failed compromise bill of 2021 with the support of industry leaders such as the Crypto Council for Innovation, Coin Center and the Chamber of Digital Commerce. The bill languished.

Crypto regulatory efforts have since slowed thanks to the recent collapse of Silicon Valley Bank, or SVB, and its effects on national banks, said Hilary Allen, professor of financial regulation at American University Washington College of Law. .

Any momentum that was building to make crypto legislation has, to some degree, been diverted to dealing with the more current crisis, Allen said. She was already skeptical that there was a possible crypto bill that could pass both the House and the Senate. Now, given that SVB is such a clear focus of the Senate Banking or House Financial Services Committee, I think this will make legislation even less likely.

In addition to campaign contributions, the crypto industry has also touched on Sinemas’ private life. In April 2021, Sinemas’ romantic partner, Lindsey Buckman, received a home equity line of credit from Figure, a blockchain-powered loan provider, on a property in Arizona, the same property where Sinema is actively registered to vote. . (Buckman did not respond to a request for comment.)

In July 2021, Apollo, the company whose employees later donated to Sinema, reached an agreement with Figure Technologies, the company behind the lender,

With the agreement between the two companies, Apollo invested funds to further develop the Figures technology and last year began experimenting with loan transfers using the Figures blockchain. (There is no evidence that Apollo’s investment in Figure had any bearing on Buckman’s loan.)

When contacted for comment, Sinemas’ spokesperson told The Intercept that Lindsey is a private citizen who is not involved in politics. She deserves to make her own financial decisions without public scrutiny, like all other private citizens.

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