Federal Election Commission greenlights bitcoin donations to political committees
WASHINGTON — The Federal Election Commission on Thursday gave a green light to donating bitcoins to political committees, one of the first rulings by a government agency on how to treat the virtual currency.
In a 6-to-0 vote, the panel said that a PAC can accept bitcoin donations, as well as purchase them, but it must sell its bitcoins and convert them into U.S. dollars before they are deposited into an official campaign account. The commission did not approve the use of bitcoin to acquire goods and services.
After the vote, however, individual commissioners offered sharply divergent views on whether their decision caps the size of bitcoin donations — creating uncertainty about how much of the Internet currency that political committees can accept.
The FEC had deadlocked on a similar question in the fall, with the three Democratic appointees saying they wanted the agency to develop a formal policy to govern the use of bitcoins in campaigns. At the time, some commissioners expressed concern that the virtual currency could be used to mask the identity of donors.
Thursday’s decision came in the form of an advisory opinion to a PAC, not an official rule or regulation, but it opened the door to the use of bitcoins by any federal political committee.
Still, it remains to be seen how many will solicit contributions in the form of the virtual currency, which is exchanged through a network that allows people to make nearly instantaneous online payments without using a bank or third party.
The digital money, whose value fluctuates dramatically, is just beginning to gain prominence in the mainstream after being embraced by libertarians and technology advocates. Rep. Jared Polis, D.-Colo., announced Thursday that his campaign would begin accepting bitcoin, joining groups such as the Libertarian Party , which began accepting bitcoin last year through a service called BitPay, which instantly converts the currency into dollars.
In its decision, the FEC said that committees accepting bitcoin must report their value based on the exchange rate the day the contribution is made. Bitcoin prices were hovering near $440 on Thursday, down from roughly $530 nearly a month ago.
The group that requested the FEC opinion, the Make Your Laws PAC, said it wanted to accept bitcoin donations in increments up to $100.
That low sum assuaged the concerns of several commissioners about the risks of the virtual currency, said Commissioner Ellen Weintraub, a Democratic appointee.
“The $100 limit was really important to us,” she said. “We have to balance a desire to accommodate innovation, which is a good thing, with a concern that we continue to protect transparency in the system and ensure that foreign money doesn’t seep in.”
Because the commission only approved the use of bitcoin as described in the request by the Make Your Laws PAC, the decision does not permit contributions of more than $100, she said.
But FEC Chairman Lee Goodman, a Republican appointee to the panel, disagreed. He said that the commission effectively decided to treat bitcoin as a form of in-kind donation — such as silver dollars and works of art — not official currency. That means bitcoin would be, like any other item of value, subject to the current $2,600 cap on contributions to candidates per election and $5,000 cap on contributions to PACs. Individuals and corporations can give unlimited sums to super PACs.
“This advisory opinion in no way established the outer limit,” Goodman said.
Goodman said the FEC needed to weigh in on the debate, even though it remains unclear how the government will deal with bitcoin more broadly.
“Just philosophically, I think it’s important for the FEC to embrace technology and innovation, and that’s what we did today,” he said.
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Washington Post staff writer Brian Fung contributed to this report.