The Kansas State Legislature has shelved a bill that sought to regulate cryptocurrency donations in political campaigns until 2024. The legislation, known as House Bill 2167 (HB 2167), was introduced this past January to cap all political donations in cryptocurrency at $100 for any primary or general election in the state.
The bill also mandated that politicians promptly convert cryptocurrency donations to US dollars, prohibiting using such funds as a long-term campaign asset.
Political Crypto Donations Bill Put on Pause
This move comes amid a heated debate on the transparency and legitimacy of political donations made in cryptocurrency, particularly following the scandalous collapse of the FTX exchange.
HB 2167 was referred to the House Committee on Elections shortly after its introduction. A committee report shared on February 22, 2023, recommended the bill’s passage with certain amendments. However, the bill was later removed from the legislative calendar due to non-compliance with the state’s Rule 1507. This particular rule imposes strict deadlines on certain bills.
The Kansas Governmental Ethics Commission expressed concerns in 2017 that cryptocurrency contributions were “too secretive.”
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This sentiment echoed the stance of Californian authorities. They initially banned crypto political donations in 2018, only to reverse their decision in July 2022.
Read more: How To Donate Crypto Using The Giving Block
A Contentious History
The use of cryptocurrency for political donations has been a contentious issue. This has been especially true after the FTX exchange’s bankruptcy and the subsequent legal troubles of its founder, Sam Bankman-Fried.
Bankman-Fried, who pleaded not guilty to charges of fraud, money laundering, and other crimes related to the collapse of FTX, was one of the most significant political donors in the United States. His substantial financial contributions were primarily directed toward Democratic candidates.
Political Crypto Donations Made by SBF and FTX. Source: Bloomberg
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Ryan Salame, a former executive at FTX, also came under the FBI’s scrutiny. Reportedly, Salame’s lawyer provided information on campaign finance activity to prosecutors before they conducted a search on his Maryland home.
David Primo, a political science professor at the University of Rochester, spoke on the situation:
“Nobody ends up looking great in this. FTX was so broad-based in their giving.”
As regulators and lawmakers grapple with the challenges posed by digital assets, the future of crypto donations in political campaigns remains uncertain.
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