As the midterm elections inch closer, political action committees (PACs) are beginning to focus on funding candidates that align with their objectives. While most PACs focus on long-lasting issues – like labor rights or government spending – a new breed of PAC is currently emerging: the cryptocurrency PAC.
Crypto-backed Super PACs focus on supporting political candidates who promise to promote digital currencies and crypto-friendly regulations, both when it comes to how people can use crypto in the consumer marketplace and which investing activities they can participate in. If you’re curious about why they’re forming today, how they operate, their specific goals and more, here’s what you need to know about crypto-backed Super PACs.
The Emergence of the Crypto-Backed Super PAC
Crypto-backed Super PACs are organizations that try to get crypto-friendly politicians elected to office. One prime example is the Financial Freedom PAC – also dubbed the Bitcoin PAC – which seeks to fund candidates who outwardly support the rights of Bitcoin owners.
The rise of cryptocurrency PACs is a response to legislator efforts to regulate the crypto landscape, usually in ways that cryptocurrency owners don’t support. Some of their concern is that regulations may limit crypto’s technological development. And some of that concern has also arisen around the potential impact of new laws on the value of various coins.
By focusing on supporting crypto-friendly candidates, crypto-backed Super PACs aim to make sure crypto owners’ voices are part of the broader political and economic conversation. Additionally, they might increase the odds that at least a few elected officials are knowledgeable about how cryptocurrencies work, both technically and within the global financial market.
This is based on indications that elected officials don’t always grasp the nature of things they attempt to regulate or investigate. One prime example involved Senator Richard Blumenthal’s lack of understanding about “finstas” — a private Instagram account — though it isn’t the only misstep involving technology and politicians who aren’t fully in tune with a topic they’re discussing.
By funding crypto-friendly legislators who are familiar with the crypto landscape, backers of cryptocurrency Super PACs hope for favorable legal outcomes around cryptocurrency regulation. Or, at least, that ill-conceived legislation based on misunderstandings or a lack of knowledge won’t move forward.
How Crypto-Backed Super PACs Work
A crypto-backed Super PAC functions pretty much like any other Super PAC. They’re independent, politically oriented committees that aim to collect donations from people or organizations that support their position. Then, they use the funds to influence policy, often by supporting candidates whose viewpoints align with their own.
Legally, Super PACs can’t donate to candidates directly. Instead, they can spend the money to advocate for or fight against politicians. For instance, they can use their collected funds to create advertisements in favor of candidates they feel support their goals. Or, they can release ads that disparage candidates who’d take actions against the Super PAC’s position.
For crypto-backed Super PACs, that mainly means taking actions that support crypto-friendly politicians. This could involve producing favorable ads for those candidates or advertisements criticizing competitors who aren’t crypto-friendly.
Another characteristic feature of a crypto-backed Super PAC is that donations aren’t typically solicited in fiat currency, like U.S. dollars. Instead, they may only allow cryptocurrency donations. In some cases, they also request donations in a specific coin. For the Financial Freedom PAC, Bitcoin is the only option. However, others may allow fiat currency in addition to crypto.
The Pros and Cons of Crypto-Backed Super PACs
As with all forms of political activism, there are benefits and drawbacks to crypto-backed Super PACs, both functionally and for people who donate. By understanding the pros and cons of cryptocurrency Super PACs, it’s easier to see how they fit into the landscape, whether more will emerge over time and whether they’re a wise option if you want to support a PAC’s objectives.
The Advantages of Crypto-Backed Super PACs
There are a few advantages to crypto-backed Super PACs. One is that they may get politicians who view cryptocurrency favorably elected. If you invest in crypto or believe in its viability as a payment mechanism, this offers a way to showcase your position and support others who feel similarly.
Super PACs are also usually objective-driven, not party-driven. While particular perspectives are often associated with one party or another, a Super PAC might opt to support or fight any candidate who doesn’t align with its goals — regardless of the candidate’s party affiliation.
If you want to support a crypto PAC, the ability to donate cryptocurrency may be a positive. This lets you show a crypto-backed Super PAC your support while using the currency type that aligns with its objectives. While that aspect is somewhat symbolic, if the value of the donated crypto rises, it also increases the impact of your donation without any extra effort.
The Drawbacks of Crypto-Backed Super PACs
While there are benefits to crypto PACs, there are drawbacks as well. Super PACs are required to disclose their donors — something that works against the anonymity commonly associated with cryptocurrencies. Additionally, once they receive donations, Super PACs can use them in any manner they choose. That might involve approaches you find inappropriate or distasteful.
There’s also the possibility that crypto-backed Super PACs may have mixed priorities. Some may require donations through a PAC-associated token. This is a move that allows a Super PAC to explore financial opportunities beyond gathering donations and supporting political goals. In some cases, that might lead to conflicts of interest or other issues.
One of the biggest drawbacks is that the donation isn’t tax-deductible — but neither are direct donations to political campaigns. So, there isn’t technically a loss in that regard if your end goal is to support a particular candidate or political objective.
Will Crypto-Backed Super PACs Become Commonplace?
Crypto-backed Super PACs are a fairly new concept. However, they may become more commonplace for several reasons. Many people who invest in crypto want to ensure regulations don’t impede their goals. As crypto becomes more popular, even traditional Super PACs might also start soliciting cryptocurrency donations.
Overall, it’s wise to assume cryptocurrency PACs will rise in popularity, at least from their current standing. However, the odds that they’ll outpace classic Super PACs are slim. Still, if you’re interested in supporting crypto-friendly candidates with your cryptocurrency, these action committees may become a solid approach.