An emerging use-case of digital assets is to accept campaign donations and political contributions in the form of bitcoin or other cryptocurrencies. While the authorities are certainly giving this a thought; two fundamental issues impede development.
Bitcoin and all other cryptocurrencies seem to face a couple of problems when it comes to payments or any real-world application. The two widely echoed criticisms are anonymity of the source and their notorious volatility.
During a hearing in Wisconsin on April 24, the subject of making donations using bitcoin and other cryptocurrencies was put forth to the Ethics Commission. Phil Anderson urged the allowance of cryptocurrency donations owing to the increasing adoption made by cryptocurrency in the society.
Being the chairman of the Wisconsin Libertarian Party, Anderson is running for governor and is a firm advocate of using bitcoin in political affairs.
“There are People that Want To Use it as Money for Contributions”
Anderson suggests a previously used procedure – make it a necessary mandate, i.e., required by state policy, to convert bitcoin donations into duly reported dollars immediately. However, the Wisconsin committee voiced two issues, very similar to the generic problems faced by bitcoin.
The traditional method of campaign donations via cheque or credit cards allows authorities to trace their source and learn about the donor’s identity. However, bitcoin’s famed pseudonymity makes this impossible, and adding to this is the inherent lack of trust that the government and other regulating bodies place in cryptocurrencies. The anonymity of the source isn’t the only hurdle. Of all the cryptocurrencies out there, bitcoin is infamous for its volatility. From its peak near $20,000 in December 2017 to $6,600 in January 2018, bitcoin as a method of donation becomes tough to analyze.
While the Wisconsin Ethics Commission has taken no immediate action, the attorney general is confident on the county adopting a policy sooner or later.
In 2014, when the price of bitcoin was around $400, the Federal Elections Commissions offered the use of the crypto, only as an in-kind contribution. However, certain states are yet to adopt this over the concerns mentioned above.
While some districts allow digital currencies as means of contributing towards the campaign, a majority of U.S. states are still skeptical about accepting it. For Montana and Washington D.C., it is mandatory for cryptocurrency donations to be converted to USD or used as an in-kind contribution, respectively. On the other hand, regulators in Kansas have rejected the use of bitcoin to fund political campaigns while the state of California has advised against it.
Upcoming ‘Young’ Government May Accept Crypto
In March 2018, Austin Petersen, a Republican party candidate from Missouri, announced that he received 24 bitcoins as donations. The donation was the single largest amount received by a political representative via cryptocurrencies.
Petersen was later evangelizing bitcoin, calling it the modern version of the type of monetary policy that liberty advocates have been proposing for years. At 37 years old, Petersen is younger than most government officials, and the new wave of politicians might be more progressive regarding the acceptance and regulation of cryptocurrencies.
“As someone who strongly believes in deregulating money, it was a natural fit for me to accept Bitcoin for my campaign and I’m more than delighted to be the US record holder for the largest donation to a candidate in US history.”