For Congressional candidate Srina Kurani, cryptocurrency is not only the future of money, it is a transformative technology that could revolutionize campaign funding and attract a new generation of voters.
He is one of the campaign contributor candidates to digital currencies such as bitcoin.
“We’re a campaign that’s talking to a large segment of the population, especially young people,” said the US-born daughter of the Indian diaspora, who voted in Tuesday’s primary as she won a congressional seat east of Los Angeles. for the Democratic nomination. Angeles.
Ms. Kurani’s entry into the digital currency to help fund her campaign would not be possible if she were to run for the California Legislature or any other office within the state. While the federal government allows political donations in cryptocurrency, California banned the practice four years ago.
The difference underscores not only the growing popularity of cryptocurrencies, but also how regulation varies widely across the US.
Some states, including Arkansas and North Carolina, also do not allow cryptocurrency donations in state running under current campaign finance laws. Others follow federal rules for congressional candidates and allow donations with disclosure requirements and contribution caps, typically set at $100. Still other states including Hawaii, Idaho and South Dakota have not adopted any specific policy around digital currency donations.
Digital currencies provide an alternative that does not depend on banks. Instead, transactions are validated and recorded on a decentralized digital ledger called a blockchain.
Perrian Boring, founder and CEO of the Chamber of Digital Commerce, a trade association representing the blockchain industry, compared the use of cryptocurrencies in politics to former President Barack Obama using smartphone technology and Donald Trump, who leveraged social media.
“Blockchain technology can increase participation in the political process in a very positive way,” said Ms. Boring, adding that this is especially true for young people and members of minority groups who may be skeptical of traditional monetary methods.
Critics say the potential downside is a lack of transparency – not knowing who is ultimately behind the donation.
Beth Rotman, director of the Money in Politics and Ethics program for the nonpartisan watchdog group Common Cause, worries that traceability is more difficult with cryptocurrencies.
“In campaign finance, you want disclosure. You need backup information,” Ms. Rotman said. “I know (cryptocurrency) is sexy and signals to people that you are a new candidate, but there has to be a better way to do this than to compromise other parts of the campaign finance system.”
Timothy Massad, former chairman of the US Commodity Futures Trading Commission, is also concerned about the disclosure.
“The danger is that this is still, to my mind, an area where there is insufficient regulation, particularly on the risk of illegal activity and money laundering,” said Mr. Massad, currently at Harvard University’s Kennedy School of Government. a research fellow.
Cryptocurrency donations have been allowed in federal races for years, after the Federal Election Commission allowed their use in a 2014 opinion.
The commission said that political committees should value digital currency contributions on the basis of market value at the time of receipt of donations. Candidates will also have to refund the contributions which come from prohibited sources or exceed the contribution limit.
In the 2017-18 election cycle, cryptocurrency donations reported to the Federal Election Commission amounted to just over $1.2 million. He has lost nearly $500,000 so far in the current cycle, which has months before the general election.
Shortly after the Federal Election Commission allowed cryptocurrency donations, then-US Representative Jared Polis, a Democrat, began soliciting them. Now Colorado’s governor, Mr. Polis, is seeking a similar contribution when he is running for re-election, with donations in cryptocurrency capped at $100.
“Through campaigns that accept cryptocurrency donations, we can demonstrate the security, accessibility and opportunity of using crypto in a variety of transactions and also help send the message that Colorado is the home of innovation,” said Polis. Campaign spokeswoman Amber Miller said.
As the popularity of digital currencies grows, some states have reevaluated restrictions on cryptocurrency contributions.
Jay Virenga, a spokesman for the California Fair Political Practices Commission, said the agency would re-examine its ban later this year.
“The Commission is always trying to keep up with and move forward with the changing universe around political activity,” said Mr. Virenga.
Oregon is one of the more innovative states in the election, being the first to vote by mail. But in 2019, Oregon banned candidates campaigning for offices within the state from accepting cryptocurrency donations. This was despite former Republican Secretary of State Dennis Richardson saying they should be considered “a new and innovative way to expand participation”.
Two months after Mr Richardson died of cancer in 2019, the Oregon Legislature closed the door to such donations. As the Senate prepared to vote, State Sen. Jeff Golden, a Democrat, said: “One of the widely shared objectives of this legislative session is to increase the transparency of money in politics, and cryptocurrency tends to go in the opposite direction. “
That sentiment is not unanimous. One of the few state lawmakers who opposed banning cryptocurrency donations was Republican Representative Bill Post. He said that many people in the Legislature did not understand this.
“I don’t want (we) to sound like a bunch of old nerdy dudes here,” he said. “Let’s rise to the pace of the 21st century.”
Jesse Grushack, 30, is one of the voters who are fond of cryptocurrencies and who support using them for political contributions. The New Yorker donated to the campaign of Democrat Matt West, a fellow cryptocurrency enthusiast who unsuccessfully bid for an Oregon congressional seat this year.
“At this point in US politics, anyone who is pro-crypto is someone I want to support,” Mr. Grushak said.
Ms. Kurani, 29, said cryptocurrency adoption is not an opportunity to demonstrate her technical credentials. It is also a way to reach those for whom digital alternatives to the US dollar are becoming their legal tender of choice.
She downplays concerns about donor privacy, saying her campaign converts crypto donations into dollars and chases down the same information – name, address, employer, occupation – that it would for any donor. .
“We are really making sure that we can represent the American people who are participating in a new type of digital currency,” she said.
This story was reported by The Associated Press. Camille Fassett in Oakland, California, Aubrey McAvoy in Honolulu, Stephen Groves in Sioux Falls, South Dakota and Keith Riddler in Boise, Idaho contributed to this report.