A handful of political candidates seeking state and federal offices have jumped on the latest digital bandwagon by offering nonfungible tokens, or NFTs, as part of their campaign fundraising and are promising exclusivity to their donors.

Blake Masters, a Republican Senate candidate in Arizona, last month launched an NFT, offering 99 tokens priced at $5,800 each. Shrina Kurani, a Democratic House candidate from California, is offering 2,022 tokens. In August, Republican Scott Jensen, a Minnesota gubernatorial hopeful, offered two batches of 25,000 tokens priced at $5 each.

In October, a group of Democratic fundraisers banded together to launch politically themed NFTs through a marketplace called Front Row to raise money for Texas Democrats.

Even Melania Trump recently launched NFTs that would help donors collect “rare and limited-edition pieces while benefiting children in the foster care community,” according to a statement from former President Donald Trump’s office.

What began in early 2021 as a new way to promote art using the blockchain technology that underlies cryptocurrencies has expanded to the gaming world, retail stores, comic book franchises and now politics. The profusion of NFTs comes even as legal experts are trying to figure out if the tokens constitute a security offering, similar to what public companies offer in stock issues, and therefore subject to regulation by the U.S. Securities and Exchange Commission.

The SEC as well as other federal agencies are still trying to grapple with the dangers of money laundering, tax evasion, and other financial crimes that NFTs could enable thanks to the anonymity offered by cryptocurrencies.

Although NFTs do not automatically fall under the umbrella of securities offerings, they could become subject to such regulations depending on what the promoter is promising, said Zachary Fallon, a partner at the New York law firm Ketsal and former SEC official.

If a candidate promises that donors can make money off their NFTs by selling or trading them in a secondary market, then the “SEC would begin to take an interest in such cases,” Fallon said.

Donors and those buying political NFTs that get digital versions of campaign memorabilia like hats and pins may not raise questions, Fallon said.

NFTs are a type of digital asset that may include things such as art, posters, book covers, sports cards, manifestos and so on that are identified by a unique code. Each piece is distinguished from another by embedded data, and promoters may include their signature or other characteristics to make them unique. Unlike cryptocurrencies, which use the same blockchain technology as NFTs and can be used in place of physical money, the nonfungible tokens cannot be exchanged or used in commercial transactions. 

In March the auction house Christie’s said it sold a digital-only artwork by Beeple, whose real name is Mike Winkelmann, for $70 million. Christie’s said it guaranteed the authenticity of the artwork with an NFT.

The retailer Macy’s in November auctioned off a range of NFTs based on its Thanksgiving Day parade floats, and Marvel Comics has issued NFTs based on its comic characters.

“Part of the allure of cryptocurrency is the anonymity or potential anonymity, but at the same time, transparency. … That’s the sort of dichotomous nature of cryptocurrency,” said Josh White, an assistant professor of finance at Vanderbilt University and a former economist with the SEC.

Just as political candidates and others seeking to raise money in the past have tapped into the hype of new technologies, including social media, the fascination with NFTs may be driven by their novelty, White said. If candidates allow donors to pay for NFTs using cryptocurrency, then it could open the door to campaign donations from unknown donors, White said.

The two candidates for Congress and the gubernatorial candidate in Minnesota promise their NFT donors some exclusivity.

Masters offers his supporters a digital cover art of his book Zero to One, co-authored with digital investor Peter Thiel, as well as an exclusive party for the token holders. Masters also promises to return half the donation if he doesn’t win the GOP primary but would allow donors to keep the NFT.

Kurani promises donors “visions and concepts in crypto” as well as potential policy agendas she would pursue in Congress.

Jensen offered his donors posters of himself with carnival-themed backgrounds and promised them that the posters, like digital trading cards, would “accumulate value based on time and scarcity.”

Front Row offered digital representations of Texas Democrats who fled the state temporarily to block a vote on a Republican-backed bill in the state Legislature regarding voting.

The candidates offering NFTs spell out limitations imposed by campaign finance laws restricting donations to $2,900 per individual and have said that donors can only be U.S. persons. Front Row said donors could only pay using U.S. dollars.

To avoid getting trapped in money laundering schemes, candidates offering NFTs would have to pick platforms that know their users and conduct anti-money laundering checks, Fallon said.