Bitcoin, the online currency, is on track to be approved for use in political campaign donations if new Federal Elections Commission rules are approved. The draft proposal, released on Thursday, would permit campaigns and political action committees to accept Bitcoin as an in-kind donation similar to the gifting of stocks or the use of a private jet, but stipulates that the virtual currency must be converted to dollars before using the funds.
The decision comes at the request of an advisory opinion from the Conservative Action Fund PAC, which is seeking guidance on a practice that the author of the request says is already taking place. Dan Backer, founder of the political and legal firm DB Capitol Strategies, told Politico in September that some PACs and candidates already receive donations in Bitcoin and that interest in the digital currency is growing. “We see a real future for this, especially among libertarian-minded supporters,” he told the news organization.
The increased focus on Bitcoin could potentially cause issues for campaigns seeking donations. Campaign finance regulations cap donations to candidates at $5,000 and donations to parties at $32,400. As an independent currency, Bitcoin’s worth in U.S. dollars depends on market forces, and it has been marked by wild swings in value. So a Bitcoin donation that falls within statutory spending limits at the time of the donation could potentially gain value before it’s liquidated by the recipient. The FEC responded:
“If an in-kind contribution made using Bitcoins would exceed the contributor’s limit, the committee may return the excessive amount either by refunding the quantity of excessive Bitcoins, or by refunding a dollar amount equal to the excessive portion of the contribution, as calculated at the time of the in-kind contribution is received.”
This rule is backed up by a further proposed stipulation requiring campaigns and PACs to report on Bitcoins received and the liquidation of Bitcoins, allowing regulators to ensure that spending limits are not subverted by the highly volatile asset’s rate of growth. On the first day of 2013, one Bitcoin was worth a little more than $13. The same Bitcoin today is trading at more than $325. And the total value of all Bitcoins in circulation today is almost $4 billion.
The FEC memo represents a growing acceptance of Bitcoin, and the currency is proving to be exceedingly resilient despite the possibility of upcoming legislative regulations. The proposed FEC rules to accept Bitcoin are currently open for public comment until Nov. 13 and are set to be voted on the following day at a full commission meeting.
Max Lockie