Witnesses in the U.S. Congress voiced their concerns about the potential for using cryptocurrencies to make illegal campaign donations during a hearing of the Subcommittee on Crime and Terrorism held today, June 26.
The hearing, titled “Protecting Our Elections: Examining Shell Companies and Virtual Currencies as Avenues for Foreign Interference,” was led by Senator Lindsey Graham with Scott Dueweke of DarkTower, David Murray of the Financial Integrity Network, and Sheila Krumholz of the Center for Responsive Politics as witnesses.
Dueweke, who is also a director at The Identity and Payments Association (IDPAY), said during his testimony that virtual currencies are “tailor made” for affecting the U.S. political process. Dueweke notes that he includes both cryptocurrencies like Bitcoin (BTC) and other centralized virtual money systems in his analysis, saying that “criminals find the relative anonymity of these systems to be a boon.”
According to Dueweke, the problem with the global reach of virtual currencies is that could lead to “a web of thousands of exchange points that connect every corner of the world to the United States, and potentially into the coffers of political candidates.”
Murray, the Vice President of the Financial Integrity Network, agrees with Dueweke’s assessment of the danger of virtual currency uses by foreigners to circumvent U.S. campaign law. He notes in his testimony that problems of transparency arise when cryptocurrencies are exchanged for other cryptocurrencies:
“Exchangers can hop from jurisdiction to jurisdiction in pursuit of favorable regulatory regimes, and the anonymity that they afford users could be attractive to foreign adversaries seeking to thwart campaign finance laws.”
One of Dueweke’s main concerns is Russia’s use of virtual currencies to affect the U.S. political system, noting that the country’s interest in releasing its own cryptocurrency and its consideration of a 13 percent crypto tax would “potentially plac[e] them in the position to benefit from money laundering using Bitcoin and other cryptocurrencies.”
Dueweke spoke highly of the “incredible possibilities” of blockchain technology, noting that in regards to both crypto and blockchain, “these systems are not inherently bad, no more so than using cash or credit cards, and should not have a stigma attached to them.”
At a different subcommittee hearing in May, one U.S. Congressman referred to blockchain as “world-changing.”
Dueweke advocated for future cooperation on an international level, with a combination of both government bodies and private partnerships working on identifying criminal uses of virtual currencies:
“The Committee would do well to set as a goal for itself to maintain and continuously establish the United States as the world's leading advocate of Internet payment systems, virtual currencies, and their use.”
Last week, the Ethics Committee of the U.S. House of Representatives issued a memorandum that all House Members must disclose their crypto holdings of more than $1,000.