AUGUSTA — In a first for Maine, two 2014 political campaigns have decided to accept Bitcoin, a digital currency, absent official word from election watchdogs at the state and federal levels.
The candidates — Republican Eric Brakey, a state senate candidate from New Gloucester; and Blaine Richardson, an independent Belfast conservative running to represent Maine’s 2nd Congressional District – made the announcements earlier this month.
About two weeks ago, Brakeytweeted a screen shot of the state’s first Bitcoin campaign contribution: 0.1133 Bitcoin, or about $91 at its Friday price.
In an early January news release, Brakey touted his raising of more than $21,000 in 2013, more money than any past Maine legislative campaign had raised to that point in an election cycle. While Brakey said only “several hundred” dollars had come in Bitcoin, he said it’s still worthwhile.
“It’s attracted a lot of young people who are digitally savvy, and it’s just a constituency that Bitcoin is attractive to.”
Matthew McDonald, Richardson’s campaign manager, said the campaign has only 0.13 Bitcoin, or about $105, as of Friday. He said it’s not necessarily the money, but the buzz surrounding Bitcoin that makes accepting it beneficial.
“It’s cutting-edge,” McDonald said. “Our campaign’s experimenting with technology and avenues that no campaign in Maine’s history has ever dealt with.”
Bitcoin, launched in 2009, is underpinned by a peer-to-peer computer network. Users of the network can “mine” coins by using software to solve complicated mathematical problems that release coins.
However, unlike normal currency, there’s no central authority controlling supply, and only 21 million coins will ever be released. About 12 million are in circulation now, and they’re designed to get harder to find as time goes on, with the last new Bitcoin expected to be found in the year 2140.
In that way, the system negates the effect of monetary inflation, because finding new coins doesn’t devalue the ones in circulation. That arrangement has made Bitcoin popular in many circles, especially among libertarians distrustful of centralized currency systems. For example, the national Libertarian Party platform calls for ending “inflationary monetary policies” federally.
Brakey runs the libertarian Defense of Liberty political action committee and was the Maine director of the 2012 presidential campaign of Ron Paul, a libertarian Republican who used to represent part of Texas in Congress and wrote a 2009 book, “End the Fed,” which advocates abolishing the Federal Reserve, the United States’ central banking system. McDonald also was a Paul supporter in 2012.
“I think a lot of people are very frustrated with the way the Federal Reserve is printing money, devaluing money,” Brakey said.
Both Brakey and McDonald said they have small amounts of Bitcoin themselves, and McDonald says its appeal among many stems from its being “pure capitalistic currency.”
But Bitcoin isn’t officially recognized as currency, even though many businesses, such as Overstock.com, have started to accept it as payment.
That’s part of the reason why its entry into electioneering has caught regulators somewhat off-guard. The most high-profile politician to accept Bitcoin probably is Texas Rep. Steve Stockman, a conservative running for U.S. Senate there.
State, Feds take different stances
The six-person Federal Election Commission deadlocked in a November vote on whether to issue an opinion about campaigns or committees accepting Bitcoin.
However, that doesn’t necessarily mean they can’t. The day before, FEC staff issued a draft advisory opinion saying that candidates and committees probably could accept them as in-kind contributions — essentially, a gift.
Similarly, Massachusetts election regulators explicitly allowed Bitcoin donations in an opinion earlier this month, setting them apart from monetary contributions and saying campaigns must convert Bitcoin to cash within five days of getting it.
However, Maine looks poised to take a different tack.
Jonathan Wayne, executive director of the Maine Ethics Commission, said his staff still is formulating an official guidance to candidates on accepting Bitcoin, but he is inclined to ask that candidates report Bitcoin donations as cash contributions, not as in-kind contributions.
In a staff opinion that Wayne wrote to the Kennebec Journal, he said accepting it isn’t prohibited, as long as campaigns follow existing law, such as recording names and addresses of contributors donating more than $10 and keeping donors within contribution limits.
However, one Maine election watchdog group says it has concerns about transparency surrounding Bitcoin.
“The very nature of Bitcoin is that it’s not regulated and hard to trace, and we have concerns about that kind of money influencing our elections,” said BJ McCollister, program director for Maine Citizens for Clean Elections, which supports the state’s optional, taxpayer-funded election system.
But Brakey’s system forces the donors to give their names and addresses while reporting, just as they would for any other contribution.
“We don’t really have that problem,” he said.
How long to hold?
Dan Backer, attorney for the Conservative Action Fund, a political action committee that requested the FEC opinion, said the stance Massachusetts held — treating Bitcoin as a “thing of value” and not money — probably makes the most sense.
“It’s pretty clear to me that if you treat it as a thing of value under applicable statutes, you’re doing the right thing,” he said. “If you have a bar of gold, the price fluctuates. Bitcoin’s more analogous to that than not.”
That fluctuation is a thorny issue, as Bitcoin value has been exceedingly volatile, especially over the past few months. In mid-January 2013, one Bitcoin was worth less than $20. On Friday, one was worth nearly $800, down from a peak of $1,100 in November. It dipped below $550 in December before rebounding.
Brakey said he hasn’t decided how long he’ll hold his Bitcoin before exchanging it for cash, but he’s planning to treat it initially as an in-kind contribution, then noting future gains the same way one would note interest from a savings account, or losses as a negative contribution.
Backer said for simplicity’s sake, he recommends campaigns cash out Bitcoin as they’re received, to reduce a need to track the gains and losses.
“And when in doubt, call a lawyer,” he said.