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Greg Abbott Campaign Now Accepting The Cryptocurency Bitcoin


by: Joe Deshotel

Mon Apr 21, 2014 at 10:00 AM CDT



Image: rollingalpha
In an odd move adopted from the even stranger Congressman Steve Stockman, Gubernatorial candidate Greg Abbott announced last week that he would now accept the cryptocurrency Bitcoin as campaign contributions.

For tax and reporting purposes Bitcoins are treated as an asset or an "in kind" contribution, but the FEC is expected to release an advisory with guidelines in the next couple of days. Two drafts have been posted and the second would limit Bitcoin donations to $100 in value.

Abbott says the move is part of his "cutting-edge digital strategy" and he welcomes the Bitcoin community to this team. According to the Wire that team is predominantly young, White, male and libertarian.

Abbott says "The spirit of Bitcoin embodies the free market principles that make Texas a leader," but there are many reason to be skeptical of the volatile decentralized digital currency.

See what is so concerning below the jump...

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The announcement on Abbott's website says, "Bitcoin is protected by an extremely secure database (the Blockchain)," but only months ago one of its biggest exchanges in Tokyo, Mt. Glox, lost nearly 750,000 customer bitcoins valued at roughly $500 Million dollars. "In bankruptcy filing, Mt. Gox said they were stolen due to a software security flaw.

Many lawmakers believe the industry needs more regulation even though that lack of regulation is precisely the draw for many Bitcoin users, and the origins and creators of Bitcoin are still unknown. Some of its many downsides include that it is not backed by any financial institution and a recent Marketwatch explainer on Bitcoin said that the "exchanges are vulnerable to hacking" and, "if something like that happens, good luck getting your money back: This isn't like an FDIC-insured bank account."

The Financial Industry Regulatory Authority, or Finra, also issued a strong warning regarding digital currencies saying they are "more than a bit risky." In its advisory the FIRA cautioned that "Bitcoin transactions can be subject to fraud and theft," and "Unlike US banks and credit unions that provide certain guarantees of safety to depositors, there are no such safeguards provided to digital wallets." Also concerning is that, "it has been used in illegal activity, including drug dealing, money laundering and other forms of illegal commerce." That is not to say that legal tender has not been used for nefarious purposes but it seems criminals particularly like the anonymity of Bitcoin.

To comply with reporting laws Abbott will not be able to accept anonymous contributions and those who would like to contribute will have to disclose the typical donation information including occupation.

Perhaps the most troubling is that the man who wants to be the next Governor of Texas would lend his credibility to a "currency" that undermines the legal tender of the United States,  especially when the call for secession is never far from the lips of many of his Party's base supporters.

You can follow me on Twitter at @joethepleb.



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In contrast to the "credible" currency that is the US dollar...

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