FEC issues opinion on Bitcoin

The FEC has become the latest agency to issue guidelines on the usage of Bitcoin. On May 8, the six-members of the FEC issued an Advisory Opinion at the request of Make Your Laws PAC (MYL), a nonpartisan political action committee that supports “making every legislature a liquid democracy.” This advisory opinion was actually an approval of MYL’s third draft proposal for an opinion on whether or not the PAC could accept Bitcoin. The original proposal by MYL would have “allowed” them, and all PACs, to accept Bitcoin donations online, only “after the contributor provides their information, and only through a ‘one-time linked address’ system that makes it harder to contribute in someone else’s name” and donations would be limited to $100 worth of Bitcoin (per contributor, per election).

The FEC Advisory Opinion reads, in part, “The Commission concludes that the requestor may accept Bitcoin contributions as proposed [in its request]… The Commission further concludes that the requestor may purchase Bitcoins with funds from its campaign depository for investment purposes but may not make disbursements using those purchased Bitcoins because Commission regulations require the committee’s funds to be returned to a campaign depository before they are used to make disbursements.”

MYL also requested permission to use Bitcoin to directly buy good and services, however the FEC denied that part of the request because a Bitcoin wallet can not legally be considered a campaign depository. In short, the FEC is considering Bitcoin to be somewhat equivalent to a cash donation, at the request of MYL, while simultaneously considering Bitcoin to be an in-kind contribution. MYL’s initial request stated, “We won’t accept more than $100 worth of Bitcoin (per contributor, per election), because even with our proposed accounting methods, Bitcoin’s auditability is more like cash contributions than like contributions mediated by banks.”

The FEC’s opinion states, “The initial receipt of Bitcoins as contributions, regardless of subsequent disposition, should be reported like in-kind contributions.” The FEC then describes a process of offsetting entries that “allow[s] the committee’s reported cash-on-hand to remain unchanged while holding Bitcoins outside a campaign depository.”

For people, parties and committees seeking some form of legitimacy for Bitcoin, this should be a welcome ruling. For those of us who would prefer Bitcoin to remain unregulated, this opinion will have little, if any, impact. Though it does set up a situation in which a candidate who has vowed to accept Bitcoin, may be faced with fines and/or penalties from the FEC for failing to abide by this new decision.