- Regulation makes giving in crypto harder than greenbacks
- Political committees have received just $580,000 in crypto
Cryptocurrency leaders are spending money to wield influence in Washington as focus on their industry skyrockets, but they don’t seem to be using their own product to do it.
Industry insiders gave $7.3 million to political campaigns and committees in 2021 through the end of January, but almost all of that money came in old-fashioned dollars.
The disparity highlights the challenges cryptocurrencies face as they move into more mainstream parts of the economy. Only $580,000 worth of cryptocurrency was donated to political committees in the current election cycle, according to a Bloomberg analysis of Federal Election Commission records, with a handful of super PAC donations making up most of the total. Not all of those contributions were from crypto industry donors.
Ultimately, it is difficult to track how much crypto is being spent in politics. Some committees that received crypto contributions didn’t follow FEC guidance in reporting them and groups that study money in politics don’t track them.
“Donations made with cryptocurrency are very difficult to identify in campaign finance data,” said Sarah Bryner, director of research and strategy at OpenSecrets, which studies money in politics.
Top recipients of political donations made in cryptocurrencies
Source: Bloomberg analysis of Federal Election Commission data
Note: Donations made in the current election cycle beginning in Jan. 2021
One reason crypto isn’t being widely used to donate to campaigns is the way the FEC regulates it. While crypto donations have been allowed since 2014, the reporting is complex and campaigns and committees have to convert the assets to dollars before spending the money, incurring a processing fee. Sponsored ContentMaking Touchpoints Touchless with Digital IdentityNEC
FEC rules also require far more record keeping and disclosure for contributions in cryptocurrencies. And the online platforms serving Democrats and Republicans, ActBlue and WinRed, don’t even accept them.
“There’s a lot of administrative hassles in doing it,” said Bill Powers, a partner practicing political law at Nossaman LLP.
Conversely, reporting contributions in dollars — whether made by check, credit card, or cash — is much more straightforward.
In an executive order signed last week, the White House called on agencies across the government to coordinate what’s thus far been a scatter-shot approach to the asset class. However, it falls short of providing clear direction on regulation.
Powers said that as the digital assets become more familiar in the wider economy they will be more familiar in politics, too.
“Crypto is becoming more commonplace, and as the campaign season heats up with outside groups making big ad buys, we’re going to see the use of cryptocurrency to make political contributions intensify,” Powers said.