The decision by California Congressman Eric Swalwell to withdraw from the presidential primary race Monday, an unsurprising move for a candidate consistently polling at less than 1%, also ended up reducing the number of Democratic candidates accepting bitcoin donations by 50% – to just one.

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Experts say crypto contributions are relatively secure and traceable, and that the Federal Election Commission has instated regulations to mitigate foul play. Yet out of the 24 Democrats running, only one candidate, Andrew Yang, is now taking virtual currency for campaign funds. It’s perhaps more a marketing tool than a financial one, in luring the tech-dependent demographic. But, for candidates not pursuing that specific slice of the electorate, it’s simply not worth the bother. All money entering candidates’ coffers, no matter the medium, is subject to tight regulation from the FEC. The most an individual can donate to a campaign for the 2020 cycle is $2,800 (it’s adjusted every two years for inflation). Foreign nationals, corporations and federal contractors are barred from contributing. So, campaigns need to be able to track where donations are coming from. Bitcoin proponents say their preferred form of payment is even easier to track than a credit card transaction. The whole point of bitcoin, they argue, is to ensure that every transaction is publicly available on the blockchain and preserved for all time. You can see the transfer from one bitcoin account, or “wallet,” to another, says Neeraj Agrawal, communications director at Coin Center, a non-profit focused on policy around crypto. “You can actually perfectly trace every bitcoin’s movement from its origination from the very beginning of bitcoin,” he says. It’s therefore possible to detect multiple donations sourced from the same stash of coins, which may signal overshooting the legal maximum. Skeptics contend that the whole point of bitcoin is actually to ensure anonymity. So, while it’s easy to trace the coin, it harder to identify the person behind that coin. “With a credit card or debit card, you can almost always get to the human being one way or another,” says Adav Noti, a lawyer at the Campaign Legal Center who oversaw the FEC’s Policy Division while the commission ruled on how to proceed with bitcoin in 2014. “With cryptocurrency, you may quickly get to a true dead end.” Daniel Weiner, a senior counsel at the Brennan Center for Justice, who also worked for the FEC, as a counsel, put it this way: “Bitcoin is a little bit more like a suitcase full of cash.” But, he added, you can set up rules to make it more traceable. So, many merchants, and political campaigns, outsource the risk to specialists known as payment processors. Conducting a process known as mining, processors verify the blockchain, track the money and detect possible fraud. The now-defunct Swalwell campaign used a processing platform called The White Company. Donors would fill out their details – name, address, date, amount – on the company’s website, and a personal wallet would be generated. The amount specified would then travel to Eric Swalwell’s personal wallet. If it didn’t match the donor name or the amount, it would automatically be rejected, said Elizabeth White, the founder and CEO of the platform, which took a processing fee from the Swalwell campaign for use of its technology.

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Nothing to stop a donor from using bitcoin to commit fraud The processor can spot a wallet that’s previously been associated with fraud, and reject it. But, even with a middleman, it’s difficult to eliminate scams, because workarounds exist. “There are bad actors,” said White. “And they’re going to try to find any way possible to do something bad.” There’s nothing to stop a donor from setting up multiple aliases and accounts and giving more money than is allowed. There’s nothing to stop a foreigner from using a VPN to get around the IP address and donating, or a non-citizen living in the US from lying on the form and donating. It’s ultimately down to the campaign to reject a contribution if something seems amiss. The buck stops at the campaign. It has to disclose all contributions to the FEC. Weiner, the counsel, said the Commission struggled with what box to fit bitcoin in. Since it’s not a fiat currency, the FEC decided that it must be filed as “in-kind,” clumped together with goods and services. Bitcoins are in the same category as if a dozen pizzas were delivered to campaign headquarters. Political candidates do comply with the disclosure requirements and take them seriously, Weiner says. “I don’t think any of them really want a story running that says they’re sloppy about disclosing their donors,” he says. That’s a particular concern for Democrats, who are generally running on platforms of democracy reform and increased transparency. That’s extra time and energy for hard-pressed campaigns. Volatility is another potential drawback. The value of bitcoin fluctuates wildly. In a quick conversion check on Google on the day of writing, one bitcoin was worth $12,555. Six minutes later, it had dropped to $12,506. The FEC rules that, as long as the donation amount that comes through is the same as the one reported, it’s acceptable. But the value was certainly prone to swing within the 15 minutes that The White Company took to verify new donations. If a contribution comes in at more than $2,800, it becomes invalid. Once the campaign receives bitcoin, they don’t have to cash out and start spending dollars straight away. But White always advised to liquidate immediately, to avoid the risk of it dropping in value. Still, gamblers would argue it could pay off to cash out later. “If you are long on bitcoin and you think it’s going to go up,” White said, “you can risk your campaign funds on it.” Compliance call for potential donors Swalwell’s campaign told me it had received a total of $8,000 from crypto contributions on the White Company platform, though they declined to say what proportion of total funds that represented. Because Swalwell only started running in April, his first and only campaign finance report isn’t due for release until July 15. But funds seemed scarce, and bitcoin didn’t appear to help significantly. “Being honest with ourselves, we had to look at how much money we were raising,” Swalwell told supporters Monday when announcing his withdrawal.

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Andrew Yang’s campaign appears to structure its compliance a little differently. According to a Yahoo Finance report, potential donors have to schedule a compliance call with the campaign, during which they review eligibility questions. If the individual passes, they’re issued a wallet address to use on whatever crypto exchange they prefer. After multiple requests, the Yang campaign didn’t comment. But Elizabeth White said the campaign had reached out about her platform, and she said she would be interested to talk to Yang, a genuinely pro-blockchain candidate, about working together. As for others: “We’re not opposed to working with other people,” she said, “but if it’s just a gimmick, we don’t take it seriously.” Politicians have accepted virtual currency donations on the federal level in the past. Missouri Republican Austin Peters accepted them for his Senate campaign, as did Libertarian Phil Anderson for his gubernatorial campaign in Wisconsin. Senator Rand Paul, a Republican with libertarian leanings, was the first presidential candidate to accept bitcoin during his 2016 run. ‘They’d take cows and goats if somebody would give them’ The libertarian attraction to bitcoin is no secret. Current Libertarian candidates for 2020 are accepting bitcoin, including Adam Kokesh, an activist who’s running on the platform of an “orderly dissolution of the federal government.” Though John McAfee isn’t accepting crypto in 2020 (he’s self-funding, according to his wife and press manager), his platform ran in 2016 under the Cyber Party, and his official campaign song this time around is recorded by the Coin Bros. None of this – including the fact that McAfee is also running his campaign from a boat in international waters, because he’s in exile for IRS felonies – screams “mainstream.” It’s a fringe practice. And there’s a reason two fringe Democratic campaigns elected to accept crypto donations: they need the money. For these outsider competitors, any money will do, no matter how it’s sent. “They’d take cows and goats if somebody would give them,” says Jeffrey Robinson, a prominent bitcoin critic and author who focuses on financial crime. It’s also an image choice, in appealing to the demographic that embraces bitcoin and uses it for everyday transactions. “Some of the more libertarian-leaning candidates have gone this route because it fits in with their personal brand as candidates, more than for financial gain,” says Noti, the lawyer. They’re actively homing in on voters who are tech-savvy, who perhaps have ideological qualms with traditional banks and so are attracted to the fact that crypto is decentralized.

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Yang has gained a reputation for being tech-forward, and has raised a lot of money and support from the “techno utopians,” as Weiner calls them – known more informally as the Yang Gang. “Yang is the leading edge here,” says Weiner. “Presumably, eventually, our robot masters are also going to accept bitcoin.” “If I’m in the White House, oh boy, are we going to have some fun in terms of the cryptocurrency community,” Yang said in May at Consensus, a blockchain conference run by crypto publication, CoinDesk. He remarked that he’d “create clear guidelines in the digital asset world” and relieve fears of regulatory shifts. While not as iconically as techy as Yang, Swalwell, a member of the bipartisan Congressional Blockchain Caucus, told me why he decided to accept crypto. “Bitcoin is the future and we’re running a campaign for the future,” he said. “We want to show and demonstrate knowledge of these emerging technologies and lead by example.” When we spoke shortly before he ended his campaign, Swalwell made it clear that it was a way to mold himself as a new-generation candidate. “I am of the generation that is inventing blockchain technology and investing in crypto,” he said. “To take on these issues of automation, artificial intelligence, the future of work, you need a president that is going to embrace technology and not be afraid of it.” He emphasized that we shouldn’t fear crypto. “Sometimes, the tendency in Washington is, if you don’t understand something, you kill it. And I don’t want to see that happen.” Rather than healthy regulation around crypto, though, there’s still an aura of fear, says Noti, adding that the anonymity is a particularly touchy point that’s associated with dark web activities. “Anybody who’s going to give you cryptocurrency, by definition, has the funds to give you regular currency,” he said. “If they refuse to do that, they might be somebody whose money you don’t want, anyway.”

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Fear aside, for the candidates not vying for Yang’s particular niche demographic, or even specifically for the younger vote, it’s a question of efficacy of fundraising. “Campaign fundraising is a volume business,” Weiner says. “Does the hassle exceed the benefit?” The resounding answer is, yes. The return is simply not sizeable enough to warrant the time and cost. “Cryptocurrency, like every other wacky thing in our world today, is something of value,” Weiner says. “But it’s the same way no major presidential campaigns accept donations of live chickens. Because that’s not very practical for them.” In terms of the future, it’s going to depend on how significantly cryptocurrency is adopted in our wider culture. If more and more people start to use crypto for life transactions, it’ll become more worthwhile for political campaigns. Even Robinson, the bitcoin critic, predicts there’s a future for crypto in politics, particularly if Facebook’s new coin, Libra, takes off. “In 2024, look for campaign contributions in Libra,” he says. “They probably will be a lot more than you’ll ever find in 2020 in bitcoin.”