Minnesota legalizes crypto contributions for state campaigns

Political campaigns in Minnesota can officially cash in on cryptocurrency contributions. But don't expect Dogecoin donations to fuel state races just yet.

Why it matters: Accepting Bitcoin and other digital currencies could allow campaigns to tap new — and potentially lucrative — donor bases.

What's new: Crypto contributions to state political campaign committees are now explicitly allowed under a law that took effect this month. Under the new rules, Minnesota campaigns must convert donations made via virtual currency to U.S. dollars within five days.

• The contribution is valued at what it was worth at the time of the donation. Any changes in price within the five-day grace period must be reflected separately in the committee's campaign finance report.

What they're saying: The Minnesota Campaign Finance & Public Disclosure Board asked legislators to address crypto to get ahead of any potential issues as digital currencies grow in popularity, executive director Jeff Sigurdson told Axios.

• He said the agency received three or four calls in 2022 from campaigns that wanted to know how to handle a crypto contribution.
• Between the lines: Wild fluctuations in value and concerns about donor transparency can present challenges for complying with campaign contribution limits and other reporting requirements.

What we're hearing: Political leaders on both sides of the aisle told Axios that they don't plan to actively seek the contributions at this time.

• "There's so much that you have to do to verify cryptocurrency and ... accept it that it's somewhat of an administrative nightmare," said DFL Party chair Ken Martin said.
• Minnesota Republican Party Chair David Hann said that while the party will "accept any lawful contribution to help our cause," leaders "have not spent any time" on the crypto question. "We'll deal with it as it happens, but for now it's not an issue."

Reality check: They aren't closing the door entirely. "If someone came to me and said, I want to give you $100,000 in cryptocurrency, I probably would figure out a way to accept it," Martin quipped.

The intrigue: Some state lawmakers previously proposed prohibiting political contributions made via virtual currencies. DFL Rep. Rick Hansen, who co-sponsored an earlier ban bill, told Axios he thinks the issue still needs to be explored further.

What we're watching: Another change in the law gives the green light for collecting political donations via Venmo and other mobile payment apps.

• That change could have a bigger immediate impact, especially for small-dollar donations collected during door knocking and fundraising.

Zoom out: While the Federal Election Commission has allowed crypto contributions to federal campaigns, rules vary widely across states.

• Minnesota is one of at least two states to have a law explicitly allowing crypto contributions, per the National Conference of State Legislatures. Several others, including California and Colorado, have administrative regulations on the books.
• Such contributions are prohibited in Oregon, Michigan, and North Carolina.

The bottom line: While it hasn't taken off yet locally, strategists say just one campaign making bank off crypto could open the floodgates.

• "Nobody wants to necessarily try something new ... until somebody else does it and does it really successfully," GOP strategist Jennifer DeJournett told Axios. "And then of course everybody will say it's a game changer."