5/8/14, at an open meeting, the United States Federal Election Commission (FEC) has voted 6-0 to pass the Advisory Opinion Request 2014-02 Draft C which will expressly allow Bitcoin donations to Make Your Laws. This draft, which was today unanimously accepted by the FEC, represents the FEC's bipartisan compromise on the issue of allowing Bitcoin donations. The FEC comes to this watershed decision thanks to an inquiry from Make Your Laws, a hybrid Super Political Action Committee (PAC) that has successfully brought about change from the US government in a timely manner. PACs may accept Bitcoin donations up to $100 worth with the use of one-time linked addresses that are provided to the potential donor after "best efforts" to verify their donor eligibility.
Previously, in 2013, the FEC reached a tie vote when previously presented with the question of whether or not donors could use Bitcoin for political contributions. The FEC was not planning to revisit the issue any time soon until Make Your Laws requested an Advisory Opinion which has now been approved by the FEC. At the April FEC open meeting on this matter, the FEC was unable to decide between two drafts of the Advisory Opinion. One, more "Republican," draft would have expressly treated Bitcoin donations as in-kind donations which could potentially be dispersed as Bitcoin in the form of salaries, purchases, etc. The other, more "Democrat," draft treated Bitcoin donations as donations of currency and required a strict $100 limit per election per recipient per contributor. Draft C "walks the line between them," according to Sai, Make Your Laws' founder. The FEC essentially treats Bitcoin donations as in-kind donations, requiring them to be reported in similar fashion.
Points The FEC Could Not Agree On
Unfortunately, the Commission was unable to agree on certain points in Make Your Laws proposal. For instance, the FEC did not reach a decision as to whether or not PACs could use donated bitcoins, as bitcoins, to purchase goods and services. Instead, PACs must sell the bitcoins and deposit them into a campaign depository within 10 days. In addition, PACs are allowed to purchase Bitcoins; however, they must also be sold and deposited in the campaign depository before they can be spent. As such, Political organizations do not yet have the OK to pay salaries in Bitcoin, even though many other entities around the world are now trying this out. It is technically possible that a one-time linked address receives over $100 in Bitcoin donations or donations from people other than the intended donor. One key and generally beneficial difference between Bitcoin transactions and credit card transactions is that the receiver does not dictate the charge. The FEC was also unable to agree to allow Make Your Laws to pass on excess donations of this nature to non profit organizations.
Though the advisory opinion is specifically written for Bitcoin donations given to Make Your Laws, a PAC. It is easily arguable that any political organization regulated by the FEC can follow these guidelines to accept Bitcoin donations. The FEC included this warning/caveat at the end of their approved Advisory Opinion; of course, the FEC also voted to allow small technical or conforming changes to the Advisory Opinion after this date.
This response constitutes an advisory opinion concerning the application of the Act and Commission regulations to the specific transaction or activity set forth in your request. See 2 U.S.C. § 437f. If there is a change in any of the facts or assumptions presented, and such facts or assumptions are material to a conclusion presented in this advisory opinion, then the requestor may not rely on that conclusion as support for its proposed activity. Any person involved in any specific transaction or activity which is indistinguishable in all its material aspects from the transaction or activity with respect to which this advisory opinion is rendered may rely on this advisory opinion. See 2 U.S.C.§ 437f(c)(1)(B). The analysis or conclusions in this advisory opinion may be affected by subsequent developments in the law including, but not limited to, statutes, regulations, advisory opinions, and case law. All advisory opinions cited herein are available on the Commission’s website.
Make Your Laws has a list of political organizations accepting Bitcoin; at this point in time, most of the political organizations accepting Bitcoin donations are not following these newly agreed upon guidelines. Make Your Laws is also working with the FEC on the topic of flexible earmarking.
Wisconsin Government Accountability Board To Change Their Stance?
Earlier this week, I reported on the Wisconsin Government Accountability Board forcing State Assemblyman-hopeful Mark Clear to return a non-anonymous Bitcoin donation of $100 USD worth. The GAB previously came to the decision to not allow Bitcoin donations within their state in March, before the recent FEC meetings. Additionally, the GAB has expressed interest in revisiting the issue after the FEC clarified their guidelines on the topic. Well: Today is that day. Hopefully, the Wisconsin GAB will soon reverse their decision and allow Bitcoin donations to flow the right way, once again.