MAY 09, 2014
Bitcoin a “Go” in Political Donations, Says FEC
In late April, the Federal Election Committee (FEC) began its rulings on how to regulate contributions to US political campaigns, if at all. Now the FEC ruled 6-0 allowing Bitcoin donations to campaigns.
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In late April, the Federal Election Committee (FEC) began its rulings on how to regulate contributions to US political campaigns, if at all. The FEC was given two draft opinions by political action committee Make Your Laws (MYL). The verdict?
Bitcoin is in.
The FEC ruled 6-0 allowing Bitcoin donations to campaigns, although “MYL must sell the bitcoins it purchases and deposit the proceeds into its campaign depository before spending those funds,” according to an advisory memo to MYL. Donations cannot exceed $100.
The value of the bitcoin donation is explicitly addressed throughout the memo. It reads:
“The availability of public exchange rates provides an objective method of determining the value of bitcoin contributions. Thus, the Commission concludes that a political committee that receives a contribution in bitcoins should value that contribution based on the market value of bitcoins at the time the contribution is received.”
The commission also concluded that Bitcoin is considered “money or anything of value.”
But wait, if bitcoin is an “in-kind” donation, how can a committee set a limit on it like it’s a traditional currency? FEC Chairman Lee Goodman addressed this in a separate statement: “Although bitcoins may share characteristics with traditional currencies, they are not issued or guaranteed by the United States or any other foreign country. Thus, by its plain language, the Act's $100 limitation on cash contributions does not and cannot apply to bitcoin contributions”
As such, this ruling would consider bitcoin as an “in-kind” donation and not cash, exempting it from laws prohibiting cash donations of more than $100.
The FEC’s memo also outlined the donation process for the donor: “MYL indicates that it will provide a unique linked address by which an individual may make a bitcoin contribution only after that contributor provides his or her name, physical address, and employer, and affirms that the contributed bitcoins are owned by him or her and that the contributor is not a foreign national.”
MYL has 10 days to convert the bitcoin into cash, another indication of them being recognized as “in-kind” donations.
Despite the ruling contradicting itself, the ruling is a much-needed boost for Bitcoin’s reputation, after the US Security and Exchanges Committee (SEC) issued a warning this week to investors that digital currencies “has the potential to give rise both to frauds and high-risk investment opportunities,” as well as a counterterrorist investigation of Bitcoin by the Department of Defense.