Bitcoin Presents New Questions About Campaign Finance Laws

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INTERACTIONS

The Federal Election Commission (FEC), entrusted with monitoring the finances and expenditures of electoral campaigns, has long irked radical libertarians, who are dedicated to a drastic downsizing (or the complete dissolution) of the national government and other statist restrictions on voluntary personal interactions. Though libertarianism, or at least a watered down form of it, has only recently garnered major mainstream acknowledgement, the tradition of staunch ideologues distancing themselves from the commission goes back decades. In 1996, for example, presidential candidate Harry Browne refused matching funds as a matter of principle, a move still reflected upon with respect and admiration within the Libertarian Party.

Regardless of such criticisms, candidates for federal office who accept campaign contributions fall under the jurisdiction of the FEC once they reach certain thresholds, making compliance with their regulations inevitable. Historically speaking, any “serious” candidates for public office, especially those seeking the presidency, have had to disclose their donors and expenditures, regardless of philosophical ideals. That said, the rise of the digital currency Bitcoin, and its entrance into electoral politics, presents interesting questions regarding existing campaign finance laws, namely whether or not they are now antiquated and unenforceable?

Since its 2009 introduction, Bitcoin has enjoyed popularity with libertarians, who have criticized the Federal Reserve System and American dollar as easily manipulated tools of inflationism and statist economic manipulation. For a movement based upon the formation of a society founded entirely upon free market principles, the opportunity to replace government-sanctioned currency with an alternative of completely independent origin was a welcomed concept. Though Bitcoin originally had little impact on electoral politics, that may change; both the Libertarian Party and one of its future presidential hopefuls are embracing the digital currency through online fundraising efforts. If successful, it may just be a question of time before Bitcoin enters the major parties.

Darryl W. Perry, who hopes to succeed Governor Gary Johnson as the party’s national torchbearer, recently determined his campaign will shun “real world” currencies and solely accept their digital alternatives. He also announced such donations will not be reported to the FEC, and declared as much in a letter sent to the commission. Though the decision not to accept “traditional” money is incredibly unconventional and will likely spark intense controversy, Perry believes he is merely practicing what radical libertarians preach by avoiding contact with the government.

“I am attempting to put into practice a belief that I hold that we should get rid of the Federal Reserve, which is a central bank,” Perry explained. “And unlike some who want to get rid of the Fed, I don’t want the government stepping in to fill the void.”

Like many tech enthusiasts, Perry was introduced to Bitcoin two years ago; his initial skepticism regarding the feasibility of computer based currency dissolved after he learned of the lack of centralized authority, something that would prevent artificial manipulation of its worth. Perry, who has promised to run the “most radical campaign in the Libertarian Party’s history” should he receive their nomination, hopes he is setting a trend for others to follow and believes future generations will drift from government sanctioned currencies.

“That’s is my hope, that it will be a lasting thing,” said Perry. “I believe that as technology progressed over the last hundred years and my lifetime, that people are getting away from the more common, commodity sort of things to where the crypto-currency is going to be the currency of the future.”

Earlier this month, the Libertarian Party also started accepting donations via Bitcoin. One must wonder how long it will be before libertarian-leaning Republicans, Democrats, and independent candidates, recognize the existence of digital currencies and mimic this strategy? The day when the major parties start accepting digital currencies may be a long way off, however, as Perry admits, “I don’t really see the Republicans or Democrats accepting Bitcoin anytime in the near future.”

But how would that change the rules of the electoral game? The rise of the digital donation presents several new problems for campaign finance reform activists and watchdog group; Bitcoin presents the possibility of anonymity, which would effectively neutralize the transparency the FEC is supposed to provide. Large amounts of money could conceivably be donated by a single individual, organization, or even come from outside the country. The fact that Bitcoin is not recognized as legal tender also means that (for the time being) donations made through this medium aren’t being reported to the FEC.

“I don’t think anyone outside the United States is interested enough in who the Libertarian Party nominee is to donate,” said Perry. “But do I think people outside country should be prohibited from donating? No, there should not be prohibitions on voluntary interactions.”

Depending upon the success Bitcoin fundraising and its staying power, it may only be a matter of time before Washington intervenes to provide oversight and limitations regarding exactly how much political organizations and candidates can receive through digital currencies and from where these donations can originate. The implications of completely unregulated campaign finance have yet to be demonstrated, though the thought will most certainly worry some activists in the post-Citizens United America, where big money has such great control over the political system.

 

Note: the Federal Election Commission did not exist until 1975. In addition to Bitcoin, Darryl W. Perry will also accept contributions in precious metals.

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3 comments
willyrave
willyrave

Bitcoin is a weird currency and consumers of financial tools and vehicles need to be very careful. This is not traditional way of money operating like taking out online payday loans in Manitoba or investing into the stocks.

Alex Gauthier
Alex Gauthier

"He also announced such donations will not be reported to the FEC, and declared as much in a letter sent to the commission." So he essentially told the FEC he's not going to abide by the law? I know the FEC is pretty impotent at times, but he can still get fined at the least

Dennis "DJ" Mikolay
Dennis "DJ" Mikolay

It is because Bitcoin is not legal tender and is thus arguably not covered by the FEC's regulations.