After leaving the Democratic Party last year, Kyrsten Sinema will run for reelection to the U.S. Senate as an independent in 2024, according to a report by the Wall Street Journal earlier this month. In her bid for reelection as the senior senator from Arizona, Sinema faces a dour approval rating in her home state and will have to fend off a challenge by Democratic Rep. Ruben Gallego, who has launched 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 windfall from the crypto industry completes a two-year arc for Sinema, who went from being a proponent of regulations that some crypto giants opposed to a force for compromise with the industry. The softened legislation on regulations fell by the wayside, though Sinema’s crypto donations kept pouring in.
“There’s not a lot of money in being a crypto skeptic.”
In the last three years, Sinema has taken in almost a half a million dollars from crypto businesses and investors. In 2021, as her position on regulating crypto eased, she raised at least $175,000 in campaign cash from the industry. Between 2022 and 2023, her campaign has received more than $330,000 from crypto companies and firms with crypto holdings.
“There’s not a lot of money in being a crypto skeptic,” said Mark Hays, a senior policy analyst with Americans for Financial Reform and Demand Progress.
Some of the largest Sinema campaign contributions over the last four years came from employees at massive private equity firms who began investing heavily in crypto and blockchain technologies in the run up to the formation of Sinema’s new caucus. These include Apollo Global Management and Andreessen Horowitz, both of which started crypto funds worth hundreds of millions.
According to Sinema’s most recent financial disclosures, fundraising from crypto-aligned interests isn’t slowing down. Donald Trump spokesperson turned cryptocurrency evangelist Anthony Scaramucci donated $6,600 to Sinema’s campaign in February, despite suffering a major loss from the implosion of crypto exchange FTX last year. (Scaramucci remains confident in crypto.)
“I’m not one of these religious figures that’s going to chant ‘Bitcoin über alles’ no matter what is going on in life,” Scaramucci said earlier this month. “So I want to frame it from that perspective, and then tell you that I’m more bullish now than I’ve ever been.”
Financial Innovation Caucus
At its inception, the trajectory of Sinema’s crypto caucus wasn’t set in stone. In May 2021, Sinema and Sen. Cynthia Lummis, R-Wyo., started 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 over the bipartisan infrastructure bill in August 2021. Sinema — along with Sens. Rob Portman, R-Ohio, and Mark Warner, D-Va. — proposed an amendment that would have strengthened cryptocurrency reporting requirements by narrowing 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 loosened reporting requirements. The president of the Blockchain Association, a trade group that advocates for “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 that June, said the proposal would be a “stunning loss for America.”
Several days later, Sinema and her co-authors on the amendment came around on some of the crypto industry’s concerns. Sinema, Warner, Portman, Lummis, and former Sen. Pat Toomey, R-Pa., announced that they had compromised on a proposal to exempt certain groups like software developers and crypto miners from enhanced reporting requirements. Both the Blockchain Association and the White House supported the compromise, but the bill failed in the Senate.
“The entire goal was moving the bipartisan infrastructure law forward,” a spokesperson for Sinema told the Intercept. “Working with the White House, we found a path forward for the bill to ensure it was not held up or derailed due to separate cryptocurrency concerns from a few Senators.”
The spokesperson disputed the characterization of Sinema’s revised bill as a softer proposed regulation.“The amendment does not ‘loosen reporting requirements,’” the spokesperson said. “It clarifies who is a broker so that people who aren’t actually brokers and cannot fulfill reporting requirements aren’t subject to reporting.”
As Congress debated the competing amendments in the third quarter of 2021, employees at crypto companies, along with venture capital and investment firms with nascent crypto holdings, contributed more than $175,000 total to Sinema’s congressional campaign committees, which raised $2 million that quarter.
These donors include employees from Andreessen Horowitz, in addition to Apollo Global Management, a private equity firm that started offering crypto services in October 2022. Apollo would emerge as the second largest donor base to Sinema’s campaign committee between 2017 and 2022.
Sinema’s 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.
Her campaign also received $27,300 in mostly maxed-out contributions from employees at Apollo, including COO Stuart Rothstein. Employees at Apollo had contributed to her campaigns in previous years but less frequently and in smaller amounts. In 2022, Sinema’s campaign received more than $151,000 from Apollo employees.
Scrutiny on Crypto
In the summer of 2022, as the cryptocurrency industry faced increasing scrutiny amid layoffs and failed pilot projects, industry leaders found steady support from Sinema and her colleagues in Congress. Sinema was the only co-sponsor of Toomey’s July 2022 Virtual Currency Tax Fairness Act, which would have exempted small personal crypto transactions from taxation and was widely celebrated by the industry.
Last August, Sinema and her colleagues reintroduced an identical version of the failed 2021 compromise bill with support from industry leaders like the Crypto Council for Innovation, Coin Center, and the Chamber of Digital Commerce. The bill has languished.
Efforts to regulate crypto have since slowed thanks to the recent collapse of Silicon Valley Bank, or SVB, and its effect on national banks, said Hilary Allen, a professor of financial regulation at American University Washington College of Law.
“Any momentum that was building to do crypto legislation has, to some extent, been deflected into dealing with the more present crisis,” Allen said. She was already skeptical about there being a potential crypto bill that could pass through both the House and the Senate. “Now, given the fact that SVB is such a clear focus of the Senate Banking or House Financial Services Committee, I think that’s going to make it even less likely that legislation will go through.”
In addition to the campaign contributions, the crypto industry has touched Sinema’s private life as well. In April 2021, Sinema’s 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 went on to donate to Sinema — entered into an agreement with Figure Technologies, the firm behind the loan provider,
With the agreement between the two companies, Apollo invested funds to further develop Figure’s technology, and last year began experimenting with loan transfers using Figure’s blockchain. (There is no evidence Apollo’s investment in Figure had any bearing on Buckman’s loan.)
When reached for comment, Sinema’s spokesperson told The Intercept, “Lindsey is a private citizen who is not involved in politics. She deserves to make her own financial decisions without public scrutiny just like all other private citizens.”