IN JUST THE past few years, the degree to which American politics has become awash with cash has well exceeded the absurdity of Monopoly, a game in which large sums of money are thrown about so carelessly that one almost whimsically wishes it were real. But things haven’t become so farcical that Monopoly money is actually used in the political arena. Or have they?
The Conservative Action Fund (CAF) has requested that the Federal Election Commission (FEC) accept Bitcoin, an open source “cryptocurrency,” as a legitimate form of political contribution. The commission has until the end of next month to reply with an advisory opinion.
It’s helpful to know the case for and against potential approval by the FEC. The CAF rests its request on three main arguments:
- Bitcoin is a form of money; it’s exchanged as an imaginary thing of value, similar in concept to any dollar, euro, pound sterling, etc.
- Bitcoin’s popularity is soaring, i.e., it’s legitimacy is supported by its growing use. The total value of all Bitcoins in circulation is currently over $1.3 billion.
- There’s an appetite for Bitcoins in the political arena. Parties and candidates want to accept them and they want to spend them. In fact, the Libertarian Party already does both.
These are undoubtedly compelling arguments, and will likely receive unyielding approval from libertarians, most of whom disapprove of the FEC’s very existence. Yet regardless of where the support emanates, there’s force behind these two words: why not? Why not permit the use of Bitcoin if there’s a case for its legitimacy and clear evidence of its popularity?
The most detailed arguments will potentially come from the advisory opinion itself, but a few have been floating in cyberspace, articulated by such sources as USA Today, Bloomberg, and Fox. Here are three:
- Bitcoin is not accepted as legal tender in any nation. It’s even banned in some corners of the world. Why should the FEC recognize an underground currency?
- Bitcoin’s value against the U.S. dollar is prone to extreme fluctuation. The CAF even recognizes this in its proposal, and links to a graph illustrating Bitcoins’ crashes. The USA Today asks “How should a political committee handle a Bitcoin contribution of $199 that jumps in value to $205 by the time the deposit hits the committee’s campaign account?”
- It’s unclear whether a donation of Bitcoins should be treated as an in-kind or monetary contribution. This dilemma matters immensely, which the CAF admits. If a Bitcoin donation were treated as an in-kind contribution, its value would be equal to its “usual and normal value on the date it is received.” If it were treated as a monetary contribution, its value would be “readily apparent.” Which of these two nearly opposite designations is correct is certainly not readily apparent.
Clearly there is sound logic to support both sides of the argument. If the FEC is ready to employ nothing but sound logic in its response, then spectators like your humble blogger are in for an interesting and fruitful dialogue. But one can only hope for such an elevated discussion; the more likely outcome is politics as usual.