Cryptocurrency exchange and wallet provider Coinbase (NASDAQ: COIN) continues to press for greater acceptance of digital currency in the United States. In its most recent move, the San Francisco-based company has established a political action committee (PAC) to help gather support for its agenda and push the subject of crypto on a state and a national level.
A PAC is a U.S.-based group or organization that campaigns for contributions from those with similar political goals. These contributions are then donated to political campaigns of specific candidates, for ballot initiatives or for legislative action. According to the Federal Election Commission (FEC), Coinbase filed documents with the commission, as required by law, informing it of the involvement of its PAC.
PACs have drawn a lot of controversy over the past several years, due primarily to a court case heard by the Supreme Court in 2010. That case, Citizens United v. FEC, resulted in corporate and union donors being allowed to donate large amounts to political campaigns—a practice that had been previously barred. Opponents’ argument to the corporate PACs has been that they could unjustly sway political decisions due to excessive donations.
The organizations still cannot contribute directly to federal campaigns and now channel their contributions through a PAC, but the PAC is still forbidden from coordinating any actions directly with the candidates. However, there have still been cases where coordination has happened, such as the one that surfaced recently of Philadelphia’s District Attorney race last year. In that race, one candidate, Tariq El-Shabazz, received a hefty fine for dealings he had with a PAC that was led by some of his own staffers.
While Coinbase hasn’t raised any money yet through the PAC, it’s still early. As investment money continues to flow into the cryptocurrency space, and more eyes are turning toward the industry, it’s easy to imagine that the company will garner a lot of attention.
Coinbase has already secured a $20-billion hedge fund that will be used for its custody product. The company is also said to be looking at other large hedge funds with which it can partner. However, this may not sit well with the Securities and Exchange Commission (SEC). Robert Hockett, a law professor at Cornell University explained, “This raises conflict concerns, given Coinbase’s also running a coin exchange, reminiscent of those that the Commission has found when securities firms have attempted to combine these two roles.”
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