Bitcoin and Politics: What Could Go Wrong?
Bitcoin, the alternative sort-of currency whose most ardent fans congregate in that part of the Venn diagram where "tech" and "libertarian" overlap, has always had a political flip-side. Its appeal is rooted in distrust -- of dollars, governments, banks, the Federal Reserve and surely other institutions besides.
So it's not surprising that the Federal Election Commission has received a request from a political action committee called the Conservative Action Fund, which seeks an advisory opinion on accepting contributions in bitcoins. The PAC spent more than $300,000 in behalf of Republicans in the 2012 election cycle and is looking to go deep on Bitcoin in 2014.
Other political organizations have already worked the Bitcoin vein, including candidates in North Dakota and Vermont. Darryl Perry, a libertarian candidate for president in 2016, is hardcore on virtual currency. He sent an open letter to the FEC in April informing the commission (which, needless to say, he deems illegitimate) that his campaign would "not be accepting donations in currencies recognized by the federal legal tender laws." Instead, Perry will "only accept bitcoin, litecoin and precious metals." (Litecoin is not, as a pitifully misinformed colleague suggested to me, a tractor beam of waves/particles that shoot seamlessly between your wallet and a hovering UFO. As best I can discern, it's a Bitcoin imitator.)
The FEC's legendary dysfunction aside, I don't think it'll be easy for it to refuse the PAC's request. (In an e-mail, former FEC lawyer Kenneth Gross agreed.) As former FEC chairman Trevor Potter noted in another e-mail, campaigns and political committees may already accept contributions in foreign currencies (provided they are from U.S. citizens and don't exceed limits). It's hard to imagine why Bitcoin should be deemed more alien than a ruble or a rupee. One catch is that Bitcoin's value fluctuates (although so do foreign currencies against the dollar). That could make the value of a given contribution hard to pin down. In part to escape that trap, the PAC wants the FEC to allow campaigns to treat Bitcoin as either a cash or an in-kind contribution -- solely at a campaign's discretion.
"Bitcoins, like silver dollar coins and credit units, have value both as currency and as an intangible good with their own value," states the letter to the FEC, which is written on letterhead from DB Capitol Strategies, a law practice that specializes in campaign law. "Thus Bitcoins are like cash, but they also have an indeterminate value, rendering them comparable to in-kind contributions. Accordingly, CAF should be permitted to treat bitcoins as either money or in-kind contributions."
Either way, it looks like bitcoins will play a role in political finance in 2014, quite possibly with the express approval of the FEC. The move would not be a huge conceptual leap, but it would, once again, expand the parameters of a campaign finance regime that is seemingly stretched to the breaking point. By 2016, the system may be so frayed that all it takes is a beam of light from your wallet to bring the whole thing crashing down.
(Francis Wilkinson is a member of the Bloomberg View editorial board. Follow him on Twitter.)