Banned Crypto Donations
People are increasingly turning to cryptocurrency, particularly Bitcoin, for everything from daily transactions to donations. However, a recent decision from California’s Fair Political Practices Commission (FPPC) has banned using cryptocurrency for political donations. Since 2014, the U.S. Federal Election Commission has allowed candidates to accept Bitcoin or other cryptos as campaign donations, but there is room for each state to make its own decision and ban this contribution method.
The Associated Press initially reported the decision. According to that initial report, the Fair Political Practices Commission passed the vote with three members supporting the ban and one opposed to it. Back in August, the FPPC had a hearing and discussed the issue of cryptocurrency for political donations, along with other election-related matters. At the time, the committee had indicated it needed more time to reach a decision. According to initial reports, the FPPC chose to ban cryptocurrency due to the combination of the difficulty in tracking its origin with the questions regarding transparency.
In a report that the FPPC received earlier in September, the staff not only outlined their research but laid out four potential draft policies. In addition to the draft that ended up as policy, an outright ban on crypto contributions, another option was allowing crypto as a “cash donation” in amounts up to $100. Any quantity over this would have to be converted back to cash before the campaign deposited it. The final options both saw crypto as “in-kind” contributions, either including crypto-to-cash conversions as part of the process, or leaving the funds in crypto.
A representative from the FPPC talked to CoinDesk the day after the announcement, indicating that this decision would not necessarily be permanent. The representative told CoinDesk that the current decision to ban crypto contributions was the result of input from stakeholders, public debate, and research by staff. The representative also clarified that “there will be further debate and analysis in the coming months and years.” As such, those interested in the future of cryptocurrency in the political world should keep an eye on California.
California is just the latest state to create a policy after the U.S. Federal Election Commission provided some guidelines. South Carolina, North Carolina, and Kansas have also banned contributions in the form of cryptocurrency. North Carolina cited the fact that state campaign finance regulations are in USD, combined with the changing valuation of crypto.
Colorado takes a middle ground, allowing funding for political campaigns via cryptocurrency but placing a cap on the maximum donation amount. Montana has a different approach to the middle ground, allowing contributions to political campaigns in cryptocurrency, provided that the political party or candidate either uses it to buy a product or service or converts the crypto to USD. Washington, D.C. has a similar approach, allowing crypto in the form of an in-kind contribution, with the politician reporting the contribution for the date that they convert it into USD.