Bitcoin's Growing Role in US Politics
Published on March 18, 2014 at 14:14 GMT
Last November, the Federal Elections Commission (FEC) voted 3-3 over a proposal allowing political campaigns to accept bitcoin donations. While, in effect, the FEC didn't say no to bitcoin, it also left some important questions unanswered.
The proposal was brought to the FEC by lawyers of the Conservative Action Fund (CAF), which, as a political action committee, wanted to pressure the FEC into looking at the merits of bitcoin as a tool for fundraising.
During the hearing, FEC commissioners did come to some conclusions regarding bitcoin's role in political contributions, summarized in an advisory letter:
“The Commission concludes that CAF may accept bitcoins as in-kind contributions under valuation, reporting, and disbursement procedures.”
This statement places bitcoin in the same category as in-kind contributions, which means bitcoin must be treated like a good or a service given in donation – a 'thing of value' – and not as money.
However, the advisory also raises questions about how politicians will deal with bitcoin donations, and, given the midterm elections due in November, coupled with recent negative bitcoin events, the issue of the cryptocurrency within the political sphere is likely to see considerable attention in 2014.
The recent news cycle regarding Mt. Gox's meltdown seems to have to shaken the political wasp's nest regarding bitcoin in the US.
Concerned about the risks of cryptocurrencies, West Virginia's Democrat Senator Joe Manchin recommended banning them altogether.
In response, Jared Polis, a Colorado Democratic Representative, wrote a satirical letter to the Fed, SEC and FDIC, among others, to request a ban on the dollar because of its use in illicit activities. His point being, of course, that, no matter the type of money, illegal things can inevitably be done with it.
Despite the doubts of some politicians, a mix of youthful optimism, along with disillusionment with the existing banking hierarchy following the 2008 global financial collapse, is leading to an increased interest in the libertarian movement, potentially exerting some influence on bitcoin acceptance in US politics.
Wes Benedict, who chairs the Libertarian Party, says that bitcoin leans towards free market ideals that the group embraces:
“We are for free market currencies, and we’re glad to see that something like bitcoin is doing well."
Those who identify with the libertarian movement are likely to be more in tune with currency issues.
Benedict says that one reason that the party was founded in 1971 was because of President Nixon's decision to move away from the gold standard for the US dollar. "With respect to currencies, we just support free markets," said Benedict.
True to Benedict's word, the Libertarian Party accepts bitcoin donations. Although he says that it represents a small percentage in proportion to the party's fundraising total. It is a growing avenue of revenue, however.
Libertarianism isn't so much about being non-conformist or non-cooperative as it is about being pro-individual and pro-entrepreneurship.
— Libertarian Party (@LPNational) March 13, 2014
Because the Libertarian Party is more closely aligned with the concept of digital currencies, however, doesn't mean that other parties aren't looking at it as a fundraising tool too.
Steve Stockman, a Republican representative from Texas, raised funds for his Senate campaign by wearing a QR code at the NYC Bitcoin Center last New Year's Eve. He was later defeated by opponent John Coryn in the Republican primary battle for that seat, however.
Stockman is not alone in seeing advantages in bitcoin.
Bryan Parker, a Democrat currently running for mayor of Oakland, California, is making rounds gathering support and eliciting bitcoin donations.
Speaking at a bitcoin meetup in Silicon Valley recently, Parker told the audience that bitcoin could eventually change an election result.
Parker's quest continues. He has teamed up with payment processor GoCoin to accept bitcoin, liquidating the funds into fiat as soon as they are received. He said that the total of donations he receives in BTC is just a small percentage of the amount raised.
However, bitcoin appears to be on an upward trend, and Parker's geographic location in the Bay Area – a technology hub – does mean he has a local audience of bitcoin enthusiasts.
Parker's use of GoCoin is one of the ways that political campaigners can accept bitcoin and turn it into fiat. But using GoCoin as a processor has limitations.
To facilitate the fundraising process further, a non-partisan organization called CoinVox has launched, providing mobile support, QR codes, and other necessities for politicians to get up and running with a systematic approach for accepting bitcoin.
CoinVox essentially wants to become the Rally.org for bitcoin donations, according to its founder Christopher David.
One reason that the FEC was asked to come to a decision on bitcoin donations was because of Dan Backer – a Washington, DC attorney who has the Conservative Action Fund as one of his clients and made the request for clarification over bitcoin donations.
Backer, however, says he is not completely satisfied with the FEC's guidance:
"You absolutely have the right to contribute to political candidates with bitcoin. The only question is then is: what do you do about reporting and valuation issues?"
Because he feels ignorance of cryptocurrencies is an issue, Backer recently created BitPAC.
The aim of BitPAC is to "ensure that decisions about bitcoin are made by those who've benefited from bitcoin," the organization's website says.
Furthermore, Backer is keeping up the political pressure on the FEC to offer more clarity on the reporting and valuation component of accepting bitcoin donations, aspects he describes as "technical issues".
"Members [of Congress] are not going to return contributions simply because the FEC cannot agree on the technical aspects of it," Backer pointed out. He added:
"Let’s create a little political pressure. If there’s one surefire thing, it’s that candidates and their money are not soon parted."
This November, 435 seats in the US House of Representatives and 33 of the 100 seats in the Senate will be contested. Over 30 states will be holding elections for governors and legislatures.
We can expect a lot of candidates and political incumbents to be talking about, and accepting, bitcoin in 2014.
Politics image via Shutterstock
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