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Laura Ali, Chairperson of the Morris County Republic Committee plans to “lead the way in 2022” with campaign fundraising through non-fungible tokens.
The idea: give donors a tangible benefit from donating to campaigns other than the knowledge that their money is supporting the party or candidate of their choice. Ali hopes the NFTs will rise in value offering donors a chance to sell their tokens at a profit.
A purchase of Morris County Republican Committee’s NFTs will also offer supporters “VIP treatment” at republican party events, such as reserving them a seat at Morris County’s Republican Convention.
On January 27, 2022, the Morris County Republican Committee
began selling a limited number of NFTs at three different levels:
- $1,000 for a platinum level NFT with 39 available for Morris County’s 39 municipalities
- $500 for a gold level NFT with 199 available
- $50 for a “Take Back NJ” NFT with 500 available; buyers of this lowest level receive an animated button of the GOP elephant kicking the Democratic donkey out of New Jersey.
Ali says the Morris County Republican Committee is the first political organization in the country to adopt NFTs as a fundraising tool. But NFTS as a campaign fundraising tool for individual candidates is not unheard of.
Early in January 2022, a Republican US Senate candidate from Arizona
raised nearly $550,000 in 36 hours by selling only 21 NFTs.
If the Morris County Republican Committee sells all their available NFTs they will raise just over $160,000. Ali was confident all the tokens will be sold out in the first week of their availability.
On January 27th, 2022, the NFTs went live for sale. Of the 738 available tokens, some 700+ are still available today for purchase.
The hope is that the value of these NFTs will rise due to their limited amount, and supporters will be able to sell them for a profit.
Cryptocurrency and NFTs have been breaking into the political landscape at a fast rate. Even NYC mayor Eric Adams took his first paycheck in bitcoin.
NFTs have been used in money laundering crimes due to their reliance on anonymity.
NFTs have the potential for use in money laundering in political campaigns and give candidates the ability to avoid campaign finance and investor laws that regulate typical cash donations.
However, NFTs have proven to be a much more powerful and attractive method of showing campaign support, especially for young voters. NFTs could therefore become a major factor in the 2022 midterms and future elections.
The money speaks for itself. Last year NFT sales reached $40 billion.
Roger Stone, a former political consultant for Donald Trump, is selling a digital real estate magazine with Trump's signature, minted as an NFT, to help pay his legal bills.
Some candidates even offer NFT investors access to private messaging channels to interact with candidates on platforms like Discord.
Here's the problem.
The Security and Exchange Commission (SEC) has ramped up enforcement against crypto players in the political arena amidst concerns that investors face increasing financial risks in NFTs.
Many scams have grown in ubiquity as the use of NFTs becomes more popular.
SEC commissioner Hester Price also warned that “fractionalization” (or reselling portions of a single token) of individual NFTs could cause the SEC to crack down on NFT campaign fundraising.
The main worry seems to be that the growing value of NFTs sold to supporters will find its way back to campaigns the original purchase financed. Essentially, this would change purchases of NFTs from political donations to business practices akin to that of a publicly-traded company.
Brett Kappel, a campaign finance lawyer with Harmon Curran law firm says, “The FEC won’t be concerned about an aftermarket in the NFTs as long as any increased value doesn’t find its way back to the campaign.” Adding that, “The SEC, however, may have some questions about whether NFTs are really just a new type of security-investments that are held in the anticipation of an increase in value that are traded in a market.”
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