Kansans could soon donate to candidates in state or local races using cryptocurrency.
Takeaways
- Crypto donations are only allowed in federal races in Kansas. A proposed bill would allow them in local and state elections as well.
- Crypto would have similar regulations to cash. There would also be a deadline to cash out the digital currency.
- Some are worried about crypto while others think it’s worth exploring.
Currently, crypto can only be accepted by candidates for federal office. But a push to regulate digital currency would open it to all elections in the state.
“We have zero crypto campaign contribution laws in place today,” Sen. Craig Bowser, a Republican from northeast Kansas who represents five entire counties and parts of three others, said to lawmakers in late January. “We can’t simply stick our heads in the sand here in Kansas and pretend like cryptocurrency doesn’t exist. We have to take action. We need laws.”
A 2014 decision by the Federal Election Commission allowed cryptocurrency in federal races. It didn’t say anything about state and local elections, though. That means states are slowly deciding to allow, or not allow, donations.
Bowser said his bill is similar to laws passed in Arizona, California, Colorado, Georgia, Ohio, Tennessee and Washington.
The bill sets out a handful of provisions. Crypto donations must:
- Be converted to U.S. dollars within three days of the donation.
- Refund the person if the donation exceeds contribution limits. No one can donate more than $200 in crypto per election.
- Collect the name, address and job of people who donate and send that information to the candidate within 24 hours of the donation.
- Be made through a U.S.-based cryptocurrency payment processor.
The Beacon called other states to see how crypto donations have impacted election cycles and whether there has been questionable activity with bitcoins and other digital currencies. But crypto is used so little in campaign contributions that states have very little to report.
Heather Ferguson is the vice president of states at Common Cause, an advocacy group focused on a handful of issues, including elections. She spent about a decade trying to close loopholes in campaign finance laws.
She’s concerned about crypto. Ferguson and other people who spoke with The Beacon worry this makes it easier for foreign money to get involved in elections, that states don’t have the ability to properly regulate these donations and that candidates will exceed contribution limits.
Contribution limit violations could be malicious or just accidental.
One election expert said he knew an election where a political action committee forgot to cash checks. They would sit on desks in campaign offices for months before being deposited. If that was crypto, the price could be completely different than its original donation.
Ferguson said information on who donated and how much it is actually worth when cashed is important — and those are in the Kansas proposal. But enforcing those policies is another story. She said it’s just another burden on already overworked election staff.
“The state is getting ahead of the regulations on the industry,” Ferguson said. “It would be advisable for them to wait until the crypto industry overall is more regulated.”
Eric Petry, counsel at the Brennan Center for Justice’s elections and government program, an advocacy group based out of NYU Law School, said cryptocurrency donations are becoming more common, but are still rare with about $1.5 million contributed in recent elections.
Petry shares all of the same concerns as Ferguson. He noted that this could open the door to more dark money in politics that overwhelms regulators and makes elections less transparent. But he doesn’t see crypto as an impossible beast to regulate.
“This is something new, it’s unknown,” Petry said. “You don’t know what you don’t know. There are risks that could emerge in the future, but that’s always going to be the case with new technology. … I don’t think that risk alone should be something that holds us back from innovation.”
There are parallels to crypto in current law. For example, residents can donate stocks to campaigns, which is a contribution that might have a different value when deposited into a campaign account.
The Kansas Ethics Commission said cryptocurrency donations are not auditable. It isn’t clear at all where that money came from. So too are cash donations, the agency said in a 2022 report.
That 2022 report implored lawmakers to regulate cryptocurrency, and Bowser said that’s what he is trying to do.
Bowser said campaigns don’t have to take crypto if they don’t want to. But it is simple enough to use. Candidates can get a crypto wallet and create a QR code and someone can scan and donate in minutes.
“This is a very good bill and I expect it to move forward as we try to address some of the crypto concerns,” he said via email.
