Crypto creeps into US politics as candidates offer NFTs
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Bloomberg: Congressional candidates are beginning to break into the world of cryptocurrency by selling non-fungible tokens (NFTs) to help finance their campaigns in the midterm elections.
Democrat Shrina Kurani, an engineer who's running for a House seat in California, and Republican Blake Masters, who's vying for the Senate in Arizona, have offered NFTs as incentives for donors, to varying degrees of success.
But these are still the early days of crypto's push into politics. Few candidates have cashed in on its rise, which includes a 60% gain in Bitcoin's value in 2021 and an NFT artwork selling for $69.3 million at a Christie's auction.
An NFT is "minted" with a unique digital certificate of authenticity using the same blockchain technology that creates Bitcoin and other cryptocurrency. But it's meant to be held, sold, or traded as an asset, rather than used as currency, and it costs money to produce - as do campaign T-shirts and other swag.
"NFTs are our campaign merchandise," Kurani said in an interview.
Kurani, who said she was the first to distribute NFTs to campaign donors through a digital marketplace called SolSea, said she's offering NFTs to seek support from a younger generation the way former President Donald Trump has used MAGA hats to raise millions of dollars from his supporters.
She raised only $6 610 and gave out fewer than a dozen tokens when the offer expired at the end of December.
Masters said he raised nearly $575 000 in late December by promising to give donors tokens with cover art for a book about startup companies that he wrote with Silicon Valley billionaire and top Trump ally Peter Thiel.
Fundraising consultants say crypto is still a ways off from becoming a regular source for contributions, and there are still questions about how easily campaign finance regulations could be skirted.
Since the Federal Election Commission first approved cryptocurrency contributions nearly eight years ago, only about a dozen campaign committees have received any money through digital currency, according to an FEC analysis of disclosure reports mentioning crypto that was shared with Bloomberg Government.
These committees had about $1 million in total crypto transactions during a period in which thousands of campaign committees raised tens of billions of dollars.
Senator Cynthia Lummis (Republican, Wyoming), a top crypto supporter in Congress, solicits campaign contributions through Bitcoin and is pushing legislatively to create rules and guidelines for the industry.
"Financial innovation is a good thing, including in politics," Lummis said in a statement. "Digital assets are secure and easy to use, and while only a few Members of Congress currently accept digital asset campaign donations, I know that number will grow. We are at the start of the digital asset revolution, and I hope my fellow senators will join me in championing financial innovation, because it will be a key factor in America's continued global financial leadership."
Veteran Democratic fundraising consultant Mike Fraioli said he doesn't understand much about crypto himself and doesn't know of any candidates raising much money with it, though more seem to be trying.
"It's still a mystery to most people," he said.
Campaign committees and donors tend to be wary of new technology due to strict campaign finance rules and other factors, according to Fraioli and other fundraising experts. Online credit card contributions to a presidential campaign were first approved by the FEC in 1999 but didn't catch on widely until after Barack Obama's success in raising millions of dollars online in the 2008 campaign.
Critics have raised concerns that cryptocurrency donations could easily avoid the donor-disclosure required under federal campaign finance laws. Democrats on the FEC said in discussing a 2014 advisory opinion that Bitcoin campaign contributions should be limited to $100 each, similar to the legal limit on cash contributions, because they are difficult to trace. FEC Republicans disagreed, and the ruling was approved without the $100 limit. Under the ruling, crypto just had to abide by the same disclosure requirements and limits as other contributions.
But more political committees are trying to get in on the crypto craze. Representative Tom Emmer (Republican, Minnesota), chairman of the National Republican Congressional Committee, announced in June that his would be the first national party committee to accept cryptocurrency contributions. He said then that "this innovative technology will help provide Republicans the resources we need to succeed."
The NRCC didn't respond to questions about how much it has raised through crypto contributions.