Cryptocurrency is showing its growing power in national politics, with its own billionaires tilting the balance in key midterm contests — and operatives in both major parties rushing to implement the underlying technologies to boost their candidates and campaigns.
The big picture: Political groups backed by wealthy crypto investors have already scored some key wins in the 2022 midterm primaries. And at this early stage in the campaign, donations from the industry already have exceeded 2020 totals by more than two-thirds, according to OpenSecrets data shared with Axios.
Be smart: Regulation of digital assets is a hot and contentious topic in Washington right now, with billions potentially on the line.
- As lawmakers eye new oversight powers, industry engagement in D.C. is skyrocketing.
Driving the news: The power of crypto runs through races in Arizona, Wyoming, Ohio, Indiana, Arkansas and Oregon.
- Rep. Shontel Brown (D-Ohio) bested primary challenger Nina Turner on Tuesday with the backing of Protect Our Future. The deep-pocketed super PAC is financed by Sam Bankman-Fried, co-CEO of crypto exchange FTX.
- FTX's other co-CEO, Ryan Salame, is single-handedly funding another super PAC, American Dream Federal Action. It backed Indiana Republican Erin Houchin, a former state senator who also won a House primary on Tuesday.
In January, when tech mogul Peter Thiel hosted a fundraiser for Harriet Hageman, the Republican challenging Rep. Liz Cheney (R-Wyo.), numerous crypto investors attended, Axios has learned.
- Donald Trump Jr., who also was in attendance, remarked to acquaintances that he'd been seated with many of them at the event, according to a source who spoke with him about it.
- Thiel also poured more than $10 million into a super PAC supporting J.D. Vance, who won Ohio's crowded Republican Senate primary Tuesday.
Zoom in: ADFA's funding comes from the crypto world but its focus is broader, two sources familiar with its work tell Axios.
- Both described its mission in more general terms, with a focus on "forward-thinking Republicans" determined to "leverage America’s scientific and technological advantages to defend our country’s long-term prosperity and security."
- The group's executive director, Brinck Slattery, previously ran Republican-turned-Libertarian Gary Johnson's 2012 campaign in New Hampshire.
- He's now working at ADFA with Chris Bond, a veteran Republican strategist.
Its most recent target is Sen. John Boozman (R-Ark.). ADFA has spent nearly $400,000 boosting Boozman as he fights a primary challenge from former NFL player and Army veteran Jake Bequette.
- Bankman-Fried has also donated directly to Boozman, who recently expressed skepticism about legislative efforts to more heavily regulate cryptocurrency trading.
- ADFA's and Protect Our Future's forays into this year's midterms come as both parties try to capitalize on digital assets for their own fundraising purposes.
- Last year, the National Republican Congressional Committee announced it would accept crypto donations. Its chair, Rep. Tom Emmer (R-Minn.), is the co-chair of the Congressional Blockchain Caucus.
- In Arizona, Republican Senate candidate Blake Masters has raked in cryptocurrency donations and offered NFTs to donors who max out to his campaign.
By the numbers: More than $22.5 million in contributions from donors in the crypto space went to federal political campaigns and committees from 2021 through March of this year.
- Of note: The bulk of that came from Salame and Bankman-Fried.
Looking ahead: Leading political consultancies are looking to crypto as a potentially significant fundraising boon for their candidates.
- Republican digital firm IMGE is putting out a report designed to educate its clients on the boost the underlying technologies can provide.
- "An advantage on crypto and blockchain, in particular, could be just a world-changing advantage," IMGE president Ethan Eilon told Axios in an interview.
- "I wanted to make sure that, to the extent I can, that folks on the right are thinking about what cryptocurrency means [and] what the implications are for politics."
What we're watching: Which candidates and races crypto forces get behind — at the congressional level and in governors' races.
- Many crypto billionaires are political novices, with 2020 being the first election in which they donated to candidates and campaigns.
- Bankman-Fried most notably dumped over $6 million into a U.S. House race in Oregon for an open seat.
- While he donated $5 million to Joe Biden in 2020 and spread the wealth to other Democrats, he’s also donated significant amounts to Republican senators, including Susan Collins of Maine and Bill Cassidy of Louisiana.
The bottom line: There's a policy dimension to crypto fundraising efforts, as well, IMGE notes in its report.
- "While crypto donations still only amount to a drop in the bucket in the grand scheme of political fundraising," it notes, "candidates who have made the crypto industry a centerpiece of their campaign platforms have raked in $7.3 million from pro-crypto industry insiders and advocates so far this cycle."
