California, US – September 2018
The politicians from California may no longer accept crypto donations. The Fair Political Practices Commission (FPPC), the institution responsible for the equitable political action, has taken this decision on 20 September. The officials declared that donations in Bitcoin and other cryptocurrencies are problematic since it is hardly possible to trace the funds back. Furthermore, they added that by accepting cryptocurrencies they can jeopardize the transparency of political campaigns.
Since the beginning of 2017 in the US, the crypto donations for political campaigns donations have increased in number and popularity. Starting September 20, on the territory of California, the officials have stopped accepting cryptocurrencies. According to them, this move should make the detection of financial violations for election campaigns easier. Thus, the FPPC has banned any crypto donations for Californian politicians.
The FCPP is an independent body that regulates campaign financing, conflicts of interest, lobbying, and government ethics. A staff member told the Commission that donations in cryptocurrencies are hard to trace and, accordingly, are impeding the discovery of any campaign-funding violations. The FPPC suggested new regulations for cryptocurrencies which should coincide with the previous rules for campaign donations. As of now, any contribution over $100 may be made only by check or by some other traceable method. As well as cash donations over $ 100 are not allowed.
“In light of the restrictions on cash contributions and expenditures as well as the one-bank
account rule, a question has arisen as to the permissible use of cryptocurrencies, such as bitcoin,
for campaign contributions and expenditures. While cryptocurrencies share some characteristics
of cash, they are a relatively modern form of currency and not issued by a governmental entity,” reads the release.
In this sense, the Commission’s report provided several options for regulation. In addition to the total ban, the employee report proposed treating cryptocurrencies as cash or treating them as “benefits in kind.” Also, the Commission would have to decide whether the crypto donations must be exchanged for US dollars or held. At the same time, however, the report recommended that the holding of cryptocurrencies should be avoided entirely:
“Allowing committees to maintain separate cryptocurrency accounts is
inconsistent with the one bank account rule and would severely thwart enforcement efforts. Not
only will it will be extremely difficult to identify to source of any particular contribution given
the very nature of cryptocurrency transactions, the Enforcement Division would also face
substantial hurdles in even accessing a committee’s cryptocurrency accounts giving the large
number of different cryptocurrencies in circulation…”
The Commission added in the end that the accounts that are not in California or even in the US are even more difficult to trace. As a conclusion, the commission decided on the simplest, if most radical, solution. With a majority of 3 to 1, they have voted for a total ban on any crypto donations for Californian politicians.