Election commission votes to allow bitcoin donations
WASHINGTON — The Federal Election Commission voted Thursday to allow political committees to accept bitcoin donations and outlined the ways that the virtual currency can be used by federally regulated campaigns.
Responding to a request from a political action committee, the commissioners unanimously approved an advisory opinion that defined bitcoins, which allows for online transactions without going through a bank or other third party, as “money or anything of value” — in essence, cash or an in-kind contribution.
They also imposed some restrictions, ruling that bitcoin donations will be capped at a cash equivalent of $100 per person per cycle, with the value determined at the time of the donation, and that a complete accounting of name, address and employer must accompany the donation.
Committees can liquidate a bitcoin contribution immediately, or they can choose to keep it as an investment, as they do with stocks and bonds.
Since the value of the virtual currency can fluctuate suddenly, the opportunity for a windfall is real, but is growing rarer as it stabilizes.
The opinion also allows committees to buy bitcoins on the open market, but prohibits them from using the coins to pay for goods or services. They must be liquidated into U.S. currency before being spent.
The ruling is both an acknowledgment of the currency’s growing popularity and a move to protect against efforts to circumvent campaign finance laws.
Bitcoins can be difficult to trace, potentially opening the gates to both illegal and foreign money.
Although the opinion provides some clarity for campaign committees, it is not likely to lead to a deluge of bitcoin donations.
“Besides the compliance burden, it’s an invitation for a headache,” said David Mitrani, an associate at Sandler Reiff Lamb Rosenstein & Birkenstock in Washington who specializes in federal and state campaign finance law.
Still, the introduction of a new source of financing could be important to some smaller campaigns and committees, especially those with significant backing from libertarians, who have embraced the currency.
The Libertarian Party has already built a small but loyal bitcoin donor base, receiving $10,000 to $20,000 a year in the currency.
Rep. Steve Stockman, R-Texas, a bitcoin enthusiast, accepted bitcoin contributions to his primary campaign against Sen. John Cornyn this year.
Greg Abbott, a Republican candidate for governor in Texas, announced last month that he would be accepting bitcoins, and he already has a few in his campaign war chest.
And Rep. Jared Polis, D-Colo., announced after the ruling that he would begin accepting bitcoin donations for his re-election campaign.