In a setback for cryptocurrency enthusiasts, the California Fair Political Practices Commission (FPPC) banned political campaigns from accepting cryptocurrency donations. The commission cited its concerns over the difficulty of tracking the origins of cryptocurrency donations as well as the transparency of those donations. The ruling is at odds with that of the US Federal Election Commission (FEC), which has allowed donations of Bitcoin to be made as in-kind contributions since 2014.
While most political campaigns probably don’t take in a huge amount of money in the form of cryptocurrency donations, the acceptance of such donations serves as a signaling function. Candidates who signal a willingness to accept Bitcoin or other cryptocurrencies are signaling their openness to cryptocurrencies and their willingness to explore alternatives to the current monetary and banking regime. Prohibiting candidates from accepting cryptocurrencies not only deprives them of a possible funding source, but also keeps them from being able to signal their openness to disruptive technologies.
The commission had explored other options aside from just an outright ban on cryptocurrency contributions. Other alternatives considered included allowing campaigns to accept up to $100 in cryptocurrencies, allowing campaigns to accept cryptocurrencies as in-kind contributions as long as the cryptocurrencies were immediately converted into dollars, and allowing campaigns to accept cryptocurrencies as in-kind contributions and then spend those cryptocurrencies on campaign expenses.
It is unfortunate that the commission decided to ban cryptocurrency donations outright, and confusing as to why it did so, especially as numerous other states have allowed political campaigns to accept cryptocurrency contributions. And while this action on the commission’s part won’t have any affect on Bitcoin IRA investors, and probably no effect on the continued adoption of Bitcoin and other cryptocurrencies, it’s still a symbolic defeat. We can only hope that this doesn’t presage an unwillingness on the part of other California state agencies to realize that Bitcoin and cryptocurrencies are the wave of the future.