Decrypt’s Art, Fashion, and Entertainment Hub.
The Kansas Legislature is mulling a new bill that would enforce a cap of $100 on crypto donations for use in any primary or general election.
This cap, should the bill pass, would be based on the “fair market value” at the time the crypto is received by the payments processor.
The bill also proposes much stricter rules on how crypto can be used by political campaigns in Kansas. Under the terms of the new rules, any crypto donations received must be converted immediately into U.S. dollars and then deposited into the campaign account.
Political campaigns wouldn’t be allowed to spend cryptocurrencies or hold them as an asset long-term either.
It's not just the size of the donations and use of cryptocurrencies that are set to be limited. Per the bill, political bodies would also be forced to perform more due diligence on how crypto donations are processed.
Under the proposed rules, crypto donations could only be accepted if they come from a crypto payment processor based in the U.S. This processor would then need to employ procedures that allow it “to form a reasonable belief” that the true identity of the contributor is known.
These procedures are set to include gathering the name and address of any contributor whenever the contribution is sent, which is then to be transmitted to the party committee.
There were no specific rules governing crypto political donations in Kansas previously, based on earlier legislation.
In contrast, though California actually banned the use of crypto donations for state and municipal political races in 2018, legislators in the state recently voted to end the ban.
Crypto and US political donations
Crypto donations have already left a significant footprint in funding U.S. elections.
According to Bloomberg, $580,000 in cryptocurrencies was donated to various political campaigns for the 2022 election cycle. This figure may have been higher, but some political action committees didn’t report these contributions to the Federal Election Commission (FEC).
Third-party commentators, such as the Swedish intergovernmental organization the International Institute for Democracy and Electoral Assistance, have also criticized the potential role of cryptocurrencies in elections worldwide.
The institute has claimed that cryptocurrencies which are designed for anonymity, could “hamper the work of oversight agencies and allow illicit donations to enter the system.”