Why Political Candidates Are Embracing Crypto Donations This Election Year

As the 2024 United States Presidential Election approaches, an increasing number of political candidates are embracing cryptocurrency donations to support their campaigns, marking a significant shift in campaign finance dynamics.

Adoption of Crypto Donations Among Political Candidates

Donald Trump became the first presidential nominee to accept crypto donations, launching a dedicated fundraising platform in May that facilitates contributions via Coinbase Commerce. Following suit, Future Forward, a Democratic Party-aligned super PAC, also accepts crypto donations through Coinbase Commerce. Similarly, Republican Senate candidate John Deaton, who is challenging incumbent Elizabeth Warren, has announced his openness to crypto donations, as confirmed by his Communications Director, Claire Hardwick.

U.S. Senator Ted Cruz, known for his advocacy of Bitcoin, also stated in a recent interview on the Web3 Deep Dive podcast that his campaign is accepting Bitcoin (BTC) donations.

Why Candidates Are Turning to Crypto

The trend of accepting crypto donations this election year is gaining traction for several reasons. Dennis Porter, Co-founder and CEO of the Satoshi Action Fund, has been instrumental in assisting political candidates with Bitcoin donations via the Lightning Network since 2020. Porter helped former presidential candidates Robert F. Kennedy Jr. and Vivek Ramaswamy, among others, integrate Bitcoin into their campaigns.

Porter believes that the widespread adoption of crypto donations sends a positive signal and encourages support from the crypto community, which could be beneficial for elected officials and their finance teams.

Benefits and Challenges of Accepting Crypto

Kara Calvert, Vice President for U.S. Policy at Coinbase, highlighted that cryptocurrencies represent the future of money due to their speed and cost-effectiveness. The focus on crypto donations this election underscores the growing number of Americans without access to traditional financial services.

Lee Bratcher, President of The Texas Blockchain Council, pointed out the advantages of donating with crypto. Unlike traditional donations, crypto donations are not typically considered taxable events, potentially reducing capital gains taxes if the donated crypto has appreciated in value.

Despite these advantages, Porter noted that Bitcoin donations tend to be modest, as many individuals prefer to keep their Bitcoin rather than donate it. He remains optimistic, however, that as Bitcoin stabilizes and supporting infrastructure develops, politicians will see a greater impact from crypto donations. Porter suggested that incentives, such as exclusive access or event tickets, could encourage more Bitcoin contributions.

Crypto’s Expanding Role in Political Donations

The influence of cryptocurrency is also growing in corporate political donations. Cryptocurrency companies now account for nearly half of all corporate funding directed towards this year’s election, with a recent report from Public Citizen showing that approximately $119 million has been raised from various contributors. Notably, Coinbase and Ripple account for over 80% of these donations.

Much of this funding is directed toward super PACs that support pro-crypto candidates. Fairshake, a leading bipartisan super PAC backed by prominent crypto companies, has emerged as one of the top spenders this election cycle.

As political campaigns increasingly embrace cryptocurrency, this trend indicates broader acceptance and suggests the possibility of clearer regulations in the near future. This growing integration of digital currencies into politics could further drive adoption both within and outside the political sphere.