Japan: Politicians Can Use Crypto to Evade Financial Disclosure Laws

Making donations to political players has always been a touchy subject at best. While American politicians have always raised funds from individuals and corporations to advance their political agenda, certain countries seem to believe that making these donations aren’t particularly legal. 

However, Sanae Takaichi, the Japanese Minister for Communications and Internal Affairs, has brought a little bit of a twist to the way political donations could be made in the country. 

No need to report earnings

According to an October 8 report from news medium Reuters, Takaichi addressed the issue of crypto-based political donations at a press conference, and asserted that donations in cryptocurrencies are not subject to disclosure under the country’s Political Funds Control Act.  

Under current legal provisions, all political donations made in fiat currencies or other standard financial instruments will need to be donated to a political organization. The funds will also be publicly reported by the receiving organization. However, as Takaichi noted, cryptocurrencies aren’t billed up to this regulatory classification, and as such, individual politicians can receive campaign funds in crypto without necessarily having to report them publicly.

According to the report, the minister that apart from not being classified in the same vein as fiat currencies, crypto assets haven’t proven to limit donations in any way. Thus, they will be allowed. 

Quite a confusing one

It is essential to note that cryptocurrencies are classified in Japan as legal payment methods. Bitcoin became an accepted payment method in the country on April 1, 2019, when the Financial Services Agency (FSA), the country’s financial watchdog, officially passed a bill to that effect.

“The new law defines Bitcoin and other virtual currency as a form of payment method, not a legally-recognized currency. Bitcoin will continue to be treated as an asset unless there are future revisions or directives to Japanese tax law,” the statement read.

However, the Political Funds Control Law, which governs political, financial contributions, has yet to include these assets as prohibited money or securities for political donation purposes, particularly due to their differences from the Japanese yen and its derivatives. 

This case is rather confusing, especially considering the clear policies that the financial policymakers in Japan have put in place to regulate cryptocurrencies. Crypto is taxable for everyone, and private individuals also have to report their crypto earnings. The reason why the same rules don’t apply to political donations is somewhat perplexing for many. 

In America, you’re free as a bird

As for politics in the United States, the use of cryptocurrencies in making donations is only as limited as the appetite that the candidates themselves have for them. As of October 2, the campaign website for 2020 Democrat House of Representative hopeful Agatha Bacelar had announced that it would be accepting cryptocurrencies for donations.

Bacelar, the California Democrat who is running against the current House of Representatives Speaker Nancy Pelosi, will be accepting Bitcoin, Ether, Bitcoin Cash, Litecoin, and USD Coin, and donations can be paid to her wallet address on popular crypto exchange Coinbase. 

In addition to Baclear, 2020 Democratic Presidential candidate Andrew Yang also made a push towards crypto when Humanity Forward Fund (Humanity FWD), a Political Action Committee (PAC) for the candidate, launched a Bitcoin-powered fundraising program, named “21 Days of Bitcoin for the 21st Century” on July 25. 

The program was launched in partnership with the BTC payment processor OpenNode, and it allowed for donors to send Bitcoin to lightning wallets between July 25 and August 14.