How To Donate Crypto To Political Campaigns – Forbes Advisor

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Interest in cryptocurrency is growing exponentially — and the 2022 midterms could be when Congressional campaigners jump on the bandwagon.

Since the 2020 presidential election, there’s been a notable uptick in US political campaigns accepting donations via cryptocurrency. Younger, more dynamic candidates started the trend — Andrew Yang was an early enthusiast — but in mid-2021, the National Republican Congressional Committee (NRCC) said it would start accepting donations in crypto, marking a major watershed for cryptocurrency in US politics.

The rules for political campaigns accepting crypto donations are murky and may vary from state to state. But with players like the NRCC getting into the game, perceptions are definitely changing.

Before you jump at the opportunity to hand some Dogecoin over to your preferred Congressional candidate, you need to know the rules and limits — such as they are — that apply to crypto donations and political campaigns.

Why Are Political Campaigns Accepting Crypto?

NRCC chair Tom Emmer said the committee started accepting crypto because people expressed interest in donating it. Others suggest that crypto is entering the political campaign sphere as a political statement, rather than a campaign convenience.

The NRCC is the first major party committee to accept cryptocurrency donations. Individual lawmakers have also been accepting crypto as donations, including Sen. Ron Wyden (D-OR), and California Congressional candidate Aarika Rhodes. According to The Washington Post, Rhodes has raised more than $ 30,000 in crypto.

But how the actual donation of crypto to political campaigns works is tricky and may limit its value as a useful source of campaign contributions.

Transparent political contributions are mandated by law, with identifying information traced to each donation so it can be followed through the system. The Federal Election Commission (FEC) has implemented strict rules to prevent crypto from bypassing its existing system for monitoring political contributions.

In 2014, the FEC released an opinion stating political action committees (PACs) may accept contributions made in Bitcoin but mandated strict reporting guidelines. PACs must keep itemized receipts from Bitcoin contributors, including their name, address, employer and occupation.

Candidates are also required to exchange crypto for dollars, which involves more paperwork, fees and time before they can put crypto contributions to work.

Some candidates are accepting these hurdles anyway to woo voters.

“By accepting crypto as a form of campaign donations, candidates are able to signal to voters that they understand tech, are pro-innovation and want to engage with a younger demographic,” says Ben Weiss, CEO and co-founder of CoinFlip, the world’s largest network of Bitcoin ATMs.

Crypto Insiders Prefer Cash Donations

More candidates are accepting crypto now that cryptocurrency is starting to see more regulation in Washington DC Industry insiders are shelling out millions in cash donations, ironically enough, to promote candidates that are friendly toward the crypto industry, according to The Washington Post.

In early March, President Joe Biden signed an executive order instructing branches of the federal government to examine the risks and benefits of cryptocurrencies. The order cites the market’s $ 3 trillion market cap in November 2021 as the decisive point pushing the government to act on digital assets.

Industry experts hope to cozy up to lawmakers as the regulatory process unfolds. But due to the challenges surrounding crypto imposed by the FEC, much of what’s been donated to lawmakers in the past by cryptocurrency insiders isn’t even in actual cryptocurrency.

Only $ 580,000 worth of cryptocurrency was donated to political committees by crypto insiders in the current cycle. The rest of the $ 7.3 million donated was in cash, according to an analysis by Bloomberg.

3 Things to Watch Out for If You’re Making Crypto Donations

There’s no question that the adoption of crypto by the US political class is yet another sign of the growing legitimacy of virtual currency.

“Using crypto for political campaigns is further evidence that it’s starting to be used more and more as a utility in everyday life,” Weiss says.

If you’re mulling crypto donations to a political campaign, you should be aware of the following caveats:

1. Cryptocurrency is high volatile

Crypto donations are treated as in-kind contributions, which means that the value is recorded when donations are received.

Campaigns must convert crypto into cash before spending it — and with how volatile it is, and how long it takes to liquidate, a portion of your contribution could be lost along the way.

Ron Watkins, a Republican House candidate in Arizona, reported that he lost 27% ($ 342) of his two Bitcoin contributions that originally totaled $ 1,255, according to the Daily Beast.

2. It’s expensive for candidates to accept

Since candidates have to convert Bitcoin into cash before they can spend it, it’s expensive for them to use. Many crypto platforms have processing fees for these types of transactions, which means that your full donation won’t go directly to the candidate.

3. Your donation won’t be anonymous

If you like crypto due to its anonymity factor, then don’t consider donating it to a political campaign. FEC rules require campaigns to report the name, address and employer of anyone who donates in cryptocurrency.

Many crypto wallets, including BitPay and Coinbase Wallet, create new wallet addresses for each transaction, which helps mask the origins of donations. Buzzfeed News points out that this fact could pose challenges for abiding by campaign finance laws.

Make sure your donations are properly recorded. Only $ 50 in cash can be contributed anonymously.


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