Rand Paul’s presidential campaign will be the first to accept political contributions in Bitcoin, a relatively new—and completely unregulated—type of digital currency.
Last May, the Federal Elections Commission voted unanimously to allow Bitcoin donations to political campaigns. But campaigns are required to sell the Bitcoins and covert them into U.S. dollars before they put them in their coffers.
Richard Hasen, a law and political science professor at the University of California, Irvine, said he’s not surprised the Kentucky Republican senator has chosen to accept Bitcoin donations.
“I think it’s more of a novelty and it certainly fits in with Senator Paul’s image to try to be tech-savvy, and there is a kind of a libertarian edge to Bitcoin,” Hasen said.
“So, I think it is quite a natural fit for him to be the one to do it.”
Still, Hasen said he doesn’t think Bitcoin donations will provide a significant source of funding for Paul’s presidential campaign.
Hasen said Bitcoin donations do pose a problem: they make it easier for people to contribute anonymously.
In an effort to put some limits in place, Paul’s campaign is only accepting up to $100 in Bitcoin per individual.
The FEC has yet to agree on whether there should be limits on how much Bitcoin money each person can give to a candidate. There is also a split on the six-member panel on rules that would make it harder to circumvent disclosure rules.
Because none of these issues have been settled, Hasen said a lot is left up to the candidates.
“We really rely on campaigns to police themselves in a lot of ways,” Hasen said. “So, the campaign, even if they give with Bitcoin, the campaign is supposed to collect information about a person’s name, address [and] employer.”
Bitcoins can’t be traced back to someone. So campaigns are going to have to rely on the donors turning over that information themselves, Hasen said. Individual candidates also aren’t allowed to receive foreign donations, among other things, which means campaigns are going to have to be careful about that, too.
However, Hasen said major presidential campaigns have not historically had big issues with foreign donations. Plus, the federal government occasionally audits campaigns to make sure campaigns are doing their job with contributions, which includes publicly disclosing any individual contributions in aggregate that exceed $200, as well as make sure all donations are legal.
Hasen said it’s hard to tell whether Bitcoin will eventually play a bigger role in political donations in the future. In the meantime, though, he said he doesn’t expect it to be a big issue.
“We will see how things go, but right now I expect that Bitcoin contributions are going to be a relatively small part of the contributions that the Paul campaign will be receiving,” Hasen said.