Campaign finance enters the age of Bitcoin

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The logo of the Bitcoin currency: a capital "B" with two vertical slashes

Image credit: Wikimedia commons

In a unanimous 6-0 decision Thursday, the Federal Election Commission approved an advisory opinion allowing the contribution of Bitcoin, the online cryptocurrency, to political campaigns. In a narrowly-drawn response to Make Your Laws PAC, Commissioners agreed that political committees could accept up to $100 worth of Bitcoin per contributor per election, while deadlocking on the question of whether committees could use the online “coin” to purchase goods and services.

FEC Vice Chair Ann Ravel, a Democrat who spoke out in opposition to unlimited Bitcoin contributions in the Commission’s last open meeting, noted that the $100 limit was crucial to her vote supporting the measure.

The currency poses unique questions for the Commission. Bitcoin is known for its anonymity, while the FEC is tasked with enforcing disclosure of campaign contributors. Bitcoin transactions cannot easily be traced, Make Your Laws’ treasurer Sai, who goes by a single name, acknowledged in his request to the commission. “Knowing that a given Bitcoin transaction comes from a specific person depends primarily on asking them and just trusting their response.”

The PAC will provide a “unique linked address” for each contributor in which that individual will affirm his/her name, physical address and that they are not a foreign national.

MORE: Bitcoin PAC opens, then closes

Determining the dollar value of a Bitcoin donation also poses challenges. The currency is traded 24 hours a day and its value fluctuates accordingly. For limit purposes, the FEC advises campaign treasurers to look at Bitcoins’ market value at the time of receipt.

While the decision is the first time the commission has explicitly signed off on the practice of raising funds with Bitcoin, it seems certain that this is just the beginning of an effort by Bitcoin fans to get the FEC to go further..

“I am certainly pushing the envelope on this issue,” said Dan Backer, an Alexandria-based campaign finance lawyer, in an interview with Sunlight. Backer serves as the treasurer for 38 different conservative and libertarian committees and has argued for the allowance of Bitcoin contributions in previous AO requests.

Backer told Sunlight that while the new opinion creates a “safe harbor” for committees to collect Bitcoin contributions, it does not explicitly prevent committees that wish to collect such contributions in a larger quantity from doing so. “You have a constitutional right to contribute to campaigns,” said Backer, noting that those contributions can come in the form of cash or other things of value.

“Bitcoin is clearly a thing of value,” he said. “It is analogous to a bag of gold coins.”

Sai could not immediately be reached for comment on the decision.

Update 5/9/14, 5/12/14 In an e-mail, Sai told Sunlight that while his committee would have preferred a decision allowing for the use of Bitcoin for goods and services, overall, “[t]his is approximately the opinion I was hoping for…it approves the major part of our request,” although he would have preferred the $100 limit were mandatory. He added that he hopes other committees following suit in receiving Bitcoin donations will begin to require donor information.