Russia’s presidential candidate, Alexei Navalny, has raised $3 million dollars in donations, to fund his campaign, primarily through bitcoin. Political analysts see Navalny as Putin’s primary opponent in the presidential race.
Alexei Navalny received approximately 600 bitcoins in three years of collecting funds. At today’s rates, the value translates to more than three million dollars. The data was extracted through public blockchain records. After the news of the donations surfaced, Navalny was criticized by the pro-Putin media about the timing of these large donations,as the timing of the donations matches with several high-profile corruption documents issued by Navalny’s anti-corruption investigative center.
Navalny leads the first opposition party in Russia. The party has an anti-corruption stance for which Navalny is the poster child. However, Navalny was barred from participating in the last presidential elections because of embezzlement charges against him. Navalny and his party criticized the election commission claiming the commission had no ground for barring Navalny from running for office. In a statement given to Reuters, the deputy commissioner of the election commission said;
“Navalny was currently ineligible to run and could only do so if he quashed his conviction via the courts. He (Navalny) is already trying to conduct a presidential campaign and, it seems, is manipulating people’s understanding about how the law, allegedly, does not apply”.
Navalny’s campaign says that the donations are not being collected for Navalny’s fight against corruption; instead, the money is being collected for the construction of Navalny’s Russia of the Future Party’s headquarters. The headquarters is still functioning even after he was barred from running for president.
Bitcoin and Political Campaign Funding
This is not the first incident of political funding being collected in the form of bitcoin and other cryptocurrencies. In 2014, the Federal Election Commission of the United States ruled that candidates can receive donations in the form of virtual currencies. The rules applied are the same as regular money: if the payment is from a prohibited source, the candidate is obligated to send the money back. Moreover, all the donations received in the form of bitcoin should be reported to the FEC in their corresponding market value in dollars. In the 2018 Senate race, Missouri Republican Senate candidate Austin Petersen received more than 24 bitcoin donations, with a combined value of around 9,700$. Jeff Carson, the campaign manager of Austin, said;
I think it goes without saying we’re going to see a lot more of this in terms of campaign contributions and campaign financing
Bitcoin has been gaining popularity in Russia. According to a survey published by a Russian Research Center, almost 2% of the participants had invested in bitcoin, 56% had heard about bitcoin while 16% had not. This shows that bitcoin has been able to make somewhat its mark on the Russian people. However, in spite of the growing popularity of bitcoin, Russian president Vladimir Putin has been pushing for strict crypto regulations. Crypto traders in Russia are already obligated to take permission from the government to start their services and are also required to present the record of every transaction, if asked. This makes Russia to not be the freest country for bitcoin despite public popularity. There have been many draft resolutions presented in the Russian parliament for crypto regulations. Just last year, the Duma (lower house of the Russian parliament) proposed to ban bitcoin or surrogate currency, as they call them. The Russian finance minister said in a statement:
This is necessary to protect Ruble as the single legal means of payment in Russia
Despite Putin government’s tries, the regulations were not passed. However, Putin has given deadline of July 1st, 2019, to the government officials to enact cryptocurrency regulations. These instructions require the government to set up a regulatory framework for digital currency transactions. In a similar fashion last year, bitcoin-trade regulation was passed by the Russian Duma after Putin ordered them to do so.