Politics and cryptocurrencies: should they be legal?
Crypto

Politics and cryptocurrencies: should they be legal?

By Giorgi Mikhelidze - 20 Oct 2019

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Politics and cryptocurrencies don’t seem to mix too well, they’re sort of like water and oil. But just like the exceptions of using water and oil together in cuisine, there’s also the exception of merging cryptocurrencies and politics together from time to time.

But what are the benefits of having cryptocurrencies being involved in politics? Who uses them and for what purpose?

In this article, we will be taking a look at three different cases where cryptocurrencies have helped democracy as well as cater to populistic ideals of a political party, both in-power and upcoming ones.

Cryptocurrencies donations in Georgia

Georgia is a relatively small Post-Soviet country and the idea of a multiple-party parliament is still quite new there. The largest part of politics is divided into two different parties which tend to dominate the scene and not necessarily allow any other party to enter parliament without a good struggle in the elections.

Because of such “domination” of the political sphere, small parties tend to struggle with financing and donations from their supporters as they’re not very confident that their parties of choice have a chance of winning.

However, there have been unprecedented methods of gathering funds in the nation. Small parties, and particularly a small Libertarian party has decided to revolve all of its finances around a cryptocurrency that they themselves have developed.

Not only do they offer the supporters a way to withdraw these cryptocurrencies from the platform, but they also assign them a vote in the future strategies of the party. Basically, if someone buys around 2% of the overall volume of GED (the crypto that the party created) they can make definitive decisions on how the party operates.

This was an amazing solution simply because stock trading in Georgia was starting to dwindle in contrast to crypto trading. Thus, the party had access to an increasing number of financially literate voters, to which they could cater to not only with the support of investment culture, but also a libertarian approach to cryptocurrencies.

Sure the party was criticised for being too populist, but hey, it worked. The ratings for this party have shot up compared to their previous years and are looking to easily enter the parliament after the 2020 elections that will lower the bar to get a representative a seat in the committee.

Overall, cryptocurrencies managed to boost the popularity of a political party, and a libertarian one at that, therefore massively increasing the chances of a small Post-Soviet country to finally integrate itself with the West and leave its red past behind.

Crypto donations in Japan

Japan has recently recognised cryptocurrency donations to political parties as completely legal tender that will not be subject to any type of regulation. This means that anyone and everyone who has cryptocurrencies can now directly support a candidate who has similar views to them.

The best part is that in this case, the donors don’t have to disclose their identity, nor their donations have to be subject to taxes. This ensures that no donator will be somehow targeted by the rivals of these political figures and that all of their donations reach its destination.

This was an amazing addition to the Japanese law as it allows a lot more freedom to crypto holders. Also considering the fact that this is Japan, it’s easy to say that it was most relevant exactly here. Almost every third Japanese person has heard of or possesses some kind of crypto portfolio which they sometimes can’t liquidate.

By donating these funds to political parties, they at least manage to dedicate those investments to a good cause. At least according to them, that is.

But critics have mentioned several reasons why this could be disadvantageous for keeping corruption levels under control or holding people accountable for their donations.

You see, in most democracies, lobbyists are quite few and far between. Most of them dedicate a very small amount of funds to their candidates of choice, simply because they want them to win. But when things come to millions of dollars worth of donations to a candidate, it’s immediately understood that it’s not due to altruistic reasons.

Therefore, critics say that should the donations go unchecked, it will become extremely hard to manage the corruption level if that person is elected. For example, a large corporation could donate millions of dollars to a specific candidate in exchange for lighter regulations on their industry.

If they are not identified, then the politician has a much easier time pushing the amendment through congress. However, if congress is aware that a large corporation donated to this political figure for the sake of this amendment, they could very likely deny the motion.

Overall, the act of donating cryptocurrencies is more than welcome, but the nondisclosure of identity should only be relevant for a set amount of funds. Let’s say that anything above $10,000 worth of crypto donations requires an identity disclosure. That should mitigate corruption issues.

How cryptocurrencies increased UAE democracy

The next country in question may not be the first one in mind for people when they hear the word democracy.

But the fact is that the United Arab Emirates has displayed some of the best, if not the best practices of combining politics and cryptocurrencies in their attempts to increase the overall democracy of their nation.

If you don’t know what I’m talking about, all you need to know is that the UAE has tasked its financial regulator to ask industry experts for feedback before they seal the deal about their cryptocurrency regulations.

This was one of the very few cases where the government requested some information from people knowledgeable about cryptocurrencies to give feedback about a drafted regulation and potentially influence some amendments to it.

Naturally, the experts will only give positive feedback about cryptocurrencies and hopefully influence the government to add some more liberal approaches to the acceptance of crypto in the country.

Although it’s not a direct involvement of cryptocurrencies into the economy, it is still one of the best examples we have of a government embracing the industry and recognising industry experts as actual experts.

Politics: will this be a trend in the future?

As a crypto supporter myself, I’m happy to hear about anything that has to do with politics and cryptocurrencies as it allows the biggest critics (the politicians) to see these currencies in action.

If you’ve ever tried to explain cryptocurrencies to somebody, you’ve most likely failed through just speech but succeeded when showing them the practical sense.

This case will be the same. The moment politicians see cryptocurrencies in action, they will be extremely likely to change their hearts about them right then and there.

Giorgi Mikhelidze
Giorgi Mikhelidze

Giorgi is a Georgia software developer with two years of experience trading on the financial markets. He is now working to spread the knowledge about the Blockchain in his country and share all of his findings and research to as many crypto enthusiasts as possible.

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