The legal team behind Non-Fungible Token (NFT) firm DataVault Holdings has requested an advisory opinion from the United States Federal Election Commission on the use of NFTs for fundraising efforts.
In a Sept. 21 letter to FEC Division General Counsel Lisa Stephenson, DataVault’s attorneys suggested sending out NFTs as “souvenirs” to individuals who have contributed to political committees, as well as giving the token holder the option to use it to promote a campaign “strictly on a volunteer basis and without any compensation.” “. The NFT company has asked the FEC to provide guidance on how it should operate as a commercial vendor — issuing tokens to members of the political committee apparently without violating federal campaign finance laws.
“DataVault’s political committee activities will be conducted on a purely commercial basis and DataVault will not seek to influence, positively or negatively, the nomination or election of any candidate for federal office,” said DataVault Consultant Elliot Burke. “DataVault will provide NFTs to political commissions in the same manner and usual course of action as other non-political commission clients.”
As suggested by DataVault, the company planned to market the NFTs “in a manner similar to a campaign hat or souvenir,” with the goal of getting political committees to offer them to donors in bulk for low dollars. VIP access tokens can be used at various campaign events, or contain artwork or literature related to the candidate’s policies. Any fees generated by issuing NFTs or transactions will be reported as a “fundraising expense,” per DataVault’s example scenario:
“The NFT is $10.00 and DataVault provides it to the Campaign Committee. The NFT is offered by the Campaign Committee to contributors who make a contribution of $10.00. Once the Campaign Committee collects a contribution associated with the NFT, it records a contribution of $10.00 and pays DataVault a fee of $3.00 as usual and ordinary fund-raising expenses.”
DataVault’s legal team has asked the FEC to provide clarification on whether the company can “design and market NFTs to political committees” in addition to providing tokens to incentivize shareholders. In a 2019 advisory opinion on NFTs, the committee determined that tokens are “physically indistinguishable from traditional forms of campaign souvenirs” such as buttons.
“The distribution of worthless blockchain tokens is not a form of compensation for volunteer services, but rather a new way for volunteers and supporters to show their support for the campaign,” the FEC said at the time. “The Commission found the worthless tokens to be similar to traditional forms of campaign souvenirs and concluded that there was nothing in law or Commission regulations that would limit or prohibit their distribution.”
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Political figures outside the Federal Election Commission have taken similar initiatives. Ahead of South Korea’s presidential election in March, Democratic Party candidate Lee Jae-myung’s campaign said it would release NFTs featuring images of the politician and his campaign pledges to those who donated money in an effort to appeal to the younger generation. In California, NFTs were the focus of a discussion among members of the state’s Fair Political Practices Committee in March, which subsequently led to the independent body’s overturning of a 2018 ban on cryptocurrency donations to candidates for state and local offices.