The U.S Federal Election Commission ruled to allow Bitcoin (BTC) 00 and other cryptocurrency donations in 2014. In individual states, the rules can be very different. Eight states allow cryptocurrency contributions, while seven have banned them entirely according to Politico. Other states are undecided, leaving federal law to reign.
California, home to Silicon Valley and a state where you might expect cryptocurrency donations to feature more heavily, last month banned any donations in digital coins.
California Commissioner Frank Cardenas, speaking at the hearing that delivered the ban said:
Hardly a day passes that there isn’t some other indication that there is someone out there who wishes us ill, foreign and or domestic.
The risk with cryptocurrencies —sometimes anonymous, and sometimes transacted through platforms which require no know your customer (KYC) or anti-money laundering (AML) checks — is that donations might not be quite what they seem. It certainly wouldn’t be impossible for a foreign entity to secretly fund a U.S midterm candidates success.
Cardenas says, that although the day may come when cryptocurrency is accepted in California elections:
For now, it’s not worth the risk.
Are Privacy Coins More of an Issue?
The risk varies from coin to coin, Bitcoin can be more easily tracked and a sender identified than Monero, for example.
Scott Duekeke, Director of cyber threat analysis company DarkTower testified in a June Senate hearing titled “Protecting Our Elections: Examining Shell Companies and Virtual Currencies as Avenues for Foreign Interference.” Duekeke said:
The greatest emerging threat of foreign funds reaching the coffers of political candidates, or to be used to fund other influence operations, are the increasing number and liquidity of privacy coins.
A cryptocurrency analyst from ICO Alert, Joseph Argiro, believes that unless regulators decide which cryptocurrencies politicians can or cannot accept, it could be difficult to ensure bad actors are not funding U.S electoral candidates. Argiro says that anonymous coin Monero should not feature at all in donations, and that political surveillance is needed for cryptocurrency campaign contributions. He also noted:
The industry is so new that the tools are still being developed to facilitate that surveillance. And that’s why people are fearful.
An Onus on the Candidate or the Regulators?
The issue is not just tracking the source of donations as they arrive, but also the reporting of the donations by candidates. The Center for Public Integrity found identifying cryptocurrency contributions in some state electoral campaign finance reports is nearly impossible. So there is also the potential risk an unethical candidate might not declare a suspicious donation transparently enough to reveal an issue.
Republican Austin Petersen of Missouri received the largest Bitcoin donation to date but had to return the donation in June 2018 as it exceeded federal contribution limits.
In 2012 a New Hampshire Republican candidate, Mark Warden, returned his cryptocurrency donations which came from Europe and South Africa. Some of these donations were from members of the Bitcoin community, outside of the U.S, hoping to encourage wider adoption for Bitcoin.
As the midterms approach, where cryptocurrency donations are allowed there will have almost certainly have been at least some cryptocurrency donations. Whether any of those carry risk may or may not be identified later as reporting and auditing are conducted.
With three billion-plus global users of cryptocurrency, such donations are a natural progression. This circles back to the age-old cryptocurrency issue — how do traditional infrastructures evolve to accommodate this new digital money, without stifling its benefits?
Do cryptocurrency donations pose a risk? Are they worth the risk for candidates, however ethical and moral they may be? Tell us your thoughts in the comments below.
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Are Cryptocurrency Donations Worth the Risk for the U.S Midterms? written by Melanie Kramer @ https://bitcoinist.com/are-cryptocurrency-donations-worth-the-risk-for-the-u-s-midterms/ October 28, 2018 Melanie Kramer