(TNS) — Somewhere among the hundreds of supporters who have contributed a stunning $1.1 million to the congressional campaign of self-proclaimed Islamophobe Laura Loomer are the donors backing the 27-year-old newcomer not with dollars but with a cryptocurrency called Bitcoin.
Until recently, digital assets like Bitcoins were the preferred currency of far-right conservatives and die-hard libertarians. The attraction? Cryptocurrencies provide anonymity and the opportunity to snub banks and governments, which have no power over cryptocurrencies because they do not recognize them as legal tender.
The option to contribute to campaigns using Bitcoin has been primarily offered by candidates, like Loomer, who appealed to the Libertarian and far-right demographic.
“Bitcoin promotes financial freedom,” said Loomer, who said she owns cryptocurrency. “We are telling the old power structure that we don’t need them anymore. We pave our own destiny financially, intellectually and with speech freedoms.”
But with more fringe candidates stepping into the political arena this election cycle and mainstream, tech-savvy candidates wanting to appear hip to the crypto crowd, donations via the controversial currency are now being accepted by candidates on both sides of the aisle.
Democratic presidential hopefuls Andrew Yang and California U.S. Rep. Eric Swalwell both accepted Bitcoin contributions before they each dropped out of the race. The campaign of Minnesota U.S. Rep. Tom Emmer, chairman of the National Republican Congressional Committee and member of the Congressional Blockchain Caucus, is also accepting cryptocurrency contributions.
“Embracing cryptocurrency signals to those who hold it that your campaign is open-minded, forward-thinking, and up to speed on how consumers are transacting in their daily lives,” said Perianne Boring, founder and chairman of the Chamber of Digital Commerce. “It also demonstrates a strong commitment to innovation and its impact on the economy, national security and American leadership.”
Others see cryptocurrency donations as a political stunt and a tool that makes it easier for bad actors to do an end run around campaign finance laws.
“I see Bitcoin often as more of a gimmick,” said Daniel Weiner, the deputy director of election reform at the Brennan Center for Justice. “The danger with Bitcoin in this realm is that it is essentially designed for anonymity and when we talk about campaign contributions the most important thing is they be disclosed.”
The U.S. Department of the Treasury this month sanctioned three employees of the Russian troll factory known as the Internet Research Agency, or IRA, for their support of the IRA’s cryptocurrency accounts. The IRA uses cryptocurrency to sow discord between political parties as part of Moscow’s broader efforts to undermine democratic countries and institutions, according to the department.
What is Bitcoin?
Bitcoin was invented in 2009 by an unknown person or group of people using the name Satoshi Nakamoto. The currency is strictly digital and has no physical form — no coins or bills. It also is not regulated by any financial institution or government — meaning transactions are made peer-to-peer, also known as P2P, without going through a third party, like a bank or payment processor such as Paypal.
Users of Bitcoin don’t identify themselves with their real names. Instead, they use Bitcoin addresses, seemingly random strings of numbers and letters, and pseudonyms. Bitcoin transactions are recorded in a public, digital ledger called a blockchain.
Despite there being a verified record of the transaction in the blockchain, the parties can remain anonymous because they are identified only by their Bitcoin address or pseudonym in the blockchain. No bank, payment processors or government agency has a record of the transaction.
That has made Bitcoin donations popular not only with libertarians who oppose any government interference in their lives but also money launderers, fraudsters and foreign political operatives seeking to covertly dump illegal amounts of cash into campaign coffers.
Recognizing Bitcoin’s potential for fraud in campaigns, and that cryptocurrency donations cannot be easily inspected by the public, the Federal Elections Commission issued an advisory opinion in 2014 with instructions on reporting cryptocurrency donations.
Under the opinion, cryptocurrency donations…