Bitcoins as a campaign financing tool
The positive growth and attractiveness of the Bitcoin has even forced the federal government to draft policies surrounding the currency’s use. In September, attorneys for the Conservative Action Fund PAC asked the Federal Election Commission for a ruling on if and how political candidates and outside groups could use the currency to contribute to campaigns. Due to the inherently anonymous nature of Bitcoins, the currency can be donated to campaigns without a money trail being immediately obvious.
“Bitcoins are a new form of money. Based on the concept that money can be ‘any object, or any sort of record, accepted as payment for goods and services,’ an anonymous creator designed this purely digital currency,” wrote Dan Backer in his request to the FEC. “Bitcoins, designed as ‘electronic cash,’ allow users to make online, peer-to-peer transfers of assets without utilizing a bank or other third party financial institution.
“As increasing numbers of individuals trade in Bitcoin, political parties and candidates also wish to accept and spend this new currency. The Libertarian Party now accepts Bitcoin contributions. Mark Warden, a recently re-elected New Hampshire State Representative, accepted Bitcoins in his recent campaign.’ Two former candidates also set up systems to accept Bitcoin contributions online: Eric Olson, a Libertarian candidate in North Dakota, and Jeremy Hansen, an independent state Senate candidate in Vermont. CAF, a political action committee, wishes to do the same—while complying with all relevant campaign finance regulations.”
“We see a real future for this, especially among libertarian-minded supporters,” Backer concluded.
In a Nov. 7 draft, the FEC ruled that political campaigns can, indeed, receive Bitcoins as campaign contributions, but cannot spend them in that form for campaign activities. Recognizing Bitcoins as an “in-kind” contribution, such as a stock or bond — reflecting a recent Federal Reserve ruling that stated that Bitcoins are not currency subjected to money control rules, as it is applied to end-users — the FEC recognized that the receipt of Bitcoins does not in itself breach any campaign finance limits.
“Because Bitcoins are neither the currency of any country nor negotiable instruments, Bitcoins are not ‘money’ under commission regulations,” the committee concluded. “Therefore, a political committee that receives Bitcoin contributions may not treat them as monetary contributions.”
While the draft still needs the vote of the full commision for it to become official, the possibility of Bitcoins being used as a legal anonymous filter for campaign financing has gave Bitcoins a seemingly undeniable and unexpected ally for its continued use. The value of the Bitcoins must be disclosed when the Bitcoins are exchanged for real capital, but as they would be pooled and randomly distributed by that point, it would be nearly impossible to say where any one Bitcoin came from, and when.
