Crypto Donations: The Latest Craze in Election Contributions
By Shalini Nagarajan
Updated: June 28, 2024, 05:15 EDT
| Reading Time: 2 minutes
Crypto donations have become a prominent trend in the 2024 US presidential election campaign.
Just last month, Donald Trump made history as the first “major party Presidential nominee” to accept donations in the form of cryptocurrencies. He launched a crypto fundraising page that allowed eligible donors to contribute using the Coinbase Commerce product.
Meanwhile, President Joe Biden’s re-election team is reportedly considering accepting crypto donations for his campaign as well.
Both candidates are keen to demonstrate their awareness of crypto-related issues and show support for an industry that is currently disappointed with the US’ regulatory enforcement approach.
Interestingly, Trump was not always a fan of crypto. In 2019, he openly expressed his disapproval, stating that cryptocurrencies were “not money” and criticizing their volatility and lack of inherent value. He even raised concerns about their potential use in illegal activities such as drug trafficking.
So why the sudden change of heart? Experts from various fields have weighed in on why these candidates have jumped on the crypto donation bandwagon.
According to best-selling author Deborah Perry Piscione, this move is reminiscent of President Barack Obama’s use of social media to raise donations during his first campaign. “Accepting crypto for political contributions is trendy, even at the age of 78,” she commented. Piscione also highlighted the privacy benefits of crypto donations, although campaigns are still required to report donor information for contributions above a certain threshold. Despite the evolving regulations surrounding crypto donations, Trump will go down in history as the first presidential candidate to accept them.
Piscione, who co-authored the book “Employment Is Dead: How Disruptive Technologies Are Revolutionizing the Way We Work,” also revealed that she advised another presidential candidate to accept crypto donations.
Jared Grey, CEO at Sushi Labs, explained that crypto enables politicians to connect with a diverse and expanding group of voters. It also brings transparency to the fundraising process. “By accepting cryptocurrencies for fundraising, politicians recognize the impact of this innovative technology on the future of payments,” Grey stated. Additionally, donors may be able to avoid paying capital gains tax on their Bitcoin donations if they contribute directly in crypto.
Michal “Mehow” Pospieszalski, CEO of MatterFi, pointed out that in the US, crypto donors are exempt from paying capital gains taxes on contributions to 501(c)(3) organizations. This tax would only apply if they sold the crypto first and then donated the proceeds.
Steffo Shambo, CEO of Shambo Consulting, added that from a tax perspective, the IRS treats crypto donations as property or stock donations. Donors who have held the crypto for over a year can claim a deduction for its fair market value without paying capital gains tax. This could be a significant advantage for early crypto investors.
However, accepting crypto donations may present additional accounting and reporting challenges for campaigns to comply with campaign finance rules. Both donors and campaigns need to meticulously document these transactions and seek advice from tax professionals to navigate this new territory.
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