Bloomberg Law: Bitcoin Campaign Donations Pose Potential Fraud Risks
Rising bitcoin values have launched a new type of campaign donor: suddenly -wealthy cryptocurrency holders who want to support candidates that value the technology.
Gaps in FEC policy around crypto donations mean even if a campaign is trying to be compliant, bad actors could take advantage of cracks, Adav Noti, senior director at the Campaign Legal Center and former associate general counsel for policy at the FEC, told Bloomberg Law.
“It’s much easier to give false information in the bitcoin context,” Noti said. “As long as the amounts are small, it’s not a big deal, but if you start getting maxed-out donors through bitcoin, it becomes potentially a very big deal.”
Noti may be better placed than most to see the potential for abuse. He helped write the FEC’s 2014 advisory opinion explaining how a nonpartisan political action committee, Make Your Laws PAC, should report bitcoin donations up to $100.
One of the biggest shortcomings with the FEC’s 2014 effort is that it doesn’t have teeth to mandate that campaigns use bitcoin collection methods that are subject to traditional know-your-customer rules that banks and other entities must follow, Noti said. Campaigns are required to collect donor information for bitcoin contributions, but it is harder to confirm that information compared to credit cards or checks, he said.