Foreign Powers Could Use Cryptocurrencies to Influence U.S. Political Process, Experts Warn

Concerns were raised during the June 26 hearing of the U.S. Congress's Subcommittee on Crime and Terrorism regarding the use of cryptocurrencies in allocating illegal donations to political campaigns, Cointelegraph reported.

Titled “Protecting Our Elections: Examining Shell Companies and Virtual Currencies as Avenues for Foreign Interference,” the hearing heard voices from different witnesses in the sectors of security, finance, and politics. Concerns over this matter originated from the alleged involvement of the Russian government during the 2016 U.S. presidential race.

Scott Dueweke, director of threat analysis company DarkTower, said that digital currency is a perfect means to disrupt the country’s political process. The director mentioned how malicious entities can take advantage of the anonymity feature of cryptocurrencies to hide their tracks in the virtual space.

Moreover, Dueweke pointed out that because this new currency operates on a global scale, crypto exchanges across the world could be used to funnel illegal funding into the pockets of people running for office. The U.S. prohibits the use of foreign money to fund a political campaign in the country, but with the aid of cryptocurrency, certain parties can circumvent this restriction.

David Murray, vice president of the Financial Integrity Network, supports Dueweke’s analysis, noting that issues with transparency can emerge if a cryptocurrency is exchanged for other forms of virtual money.

“Exchangers can hop from jurisdiction to jurisdiction in pursuit of favorable regulatory regimes, and the anonymity that they afford users could be attractive to foreign adversaries seeking to thwart campaign finance laws,” Murray said. He went on to express his concern about Russia’s potential meddling in the U.S. political system, which is currently being investigated by the FBI, with the NRA at the controversy’s center.

Senator Sheldon Whitehouse added that certain parties may use cryptocurrency for money-laundering activities during elections. Thus, he proposed an exacting process that would compel an individual to submit identity requirements should they decide to donate to a political campaign.

Concerns regarding Russia and its influence on blockchain have been brewing in recent years, despite President Vladimir Putin remaining reticent about the subject. A Russian delegate told a representative during last year’s International Standards Organizations that blockchain will belong to them, a comment that had delegates worried.