[dropcap size=small]T[/dropcap]his morning, the Federal Election Commission met in an open meeting to discuss Advisory Opinion Request 2014-02 (AO-2014-02) which was originally presented by Sai of Make Your Laws Political Action Committee (PAC) on 2/10/14. Make Your Laws is a non-partisan hybrid Super PAC formed in 2012 that focuses on democratic reform. Today’s hearing saw discussion from commissioners on the consequences of any FEC decision, as well as the specifics to the decision itself. Make Your Laws’ intent with their Advisory Opinion request is to have the FEC create guidelines for Bitcoin donation acceptance that can then be adopted across the country.
Last Novemeber, the FEC reached a deadlock when they met to vote on a draft proposal that would have expressly let political committees accept Bitcoin donations as in-kind donations. Contrary to widespread mainstream media reporting at the time that claimed “Donors can’t use Bitcoins for contributions,” dozens of campaigns around the country have announced their acceptance of Bitcoin. In fact, Texas Congressman Stockman accepted Bitcoin in his Senate campaign, and a Texas Gubernatorial hopeful has also jumped on the Bitcoin bandwagon. Make Your Laws has a comprehensive list of Political organizations accepting Bitcoin.
In the last week, the FEC has come up with two different draft proposals for how to allow Make Your Laws (and other PACs) to accept Bitcoin donations. Draft A allows Bitcoin donations as in-kind donations and could even spend those donated bitcoins as bitcoins. Draft B, on the other hand, only allows for donations up to $100. Potential donors would have to certify that the donation is from themselves and that they are a US citizen or permanent resident (aka green card holder). In both drafts, PACs may buy Bitcoins with their own money for investment purposes. However, they will be required to convert the Bitcoins to fiat within a campaign depository before any profits can be spent. Sai, Make Your Laws’ President and Treasurer, has published Make Your Laws’ official comments and opinion on the two drafts. Sai wishes to accept up to $100 of Bitcoin per election/recipient/contributor, and only after making best efforts to verify their identity.
PACs Can’t Pay Employees In Bitcoin
In one of the draft proposals considered, the FEC specifically says:
Because a bitcoin wallet is not held at a state or federal bank and is not insured by any government agency, it does not meet the criteria of a “campaign depository.” See 2 U.S.C. § 432(h).12
Bitcoin will likely never be insured by any government agency; however, private Bitcoin insurance already exists across the pond in the United Kingdom. Since all employee disbursements most originate from within the campaign depository, this means that we will never see Bitcoin paychecks going to a political campaign or its committee staff. However, government employees in America have already started getting paid in Bitcoin.
FEC’s Likely Decision
Most observers agree that it isn’t a question of if, or even when, the FEC will allow Bitcoin donations. Rather, the ultimate question is how Bitcoin donations will be treated. Most commissioners expressed interest in allowing Make Your Laws accept Bitcoin donations of under $100, to curb the potential abuses of Bitcoin anonymity. Commissioners voiced the concern that the anonymity issues with Bitcoin are the same that are present with cash, which is the analogy that provides for the $100 contribution limit. Petty cash contributions are limited to $100, but are strictly anonymous. However, the FEC does not want to set any precedence claiming that Bitcoin is like cash, or money. The FEC wishes to stick by the IRS’s Virtual Currency Guidance that Bitcoins are to be treated as property. The FEC has asked for more time to write a new draft combining the points from Drafts A and B as suggested as Sai, so they can work on a compromise. The FEC will be seeking a legal framework to apply the cash $100 limit to Bitcoin donations without opining that it is in any way, shape, or form: Cash.
At today’s meeting, the FEC asked for a further extension until 5/5/14 to decide. Sai expects a meeting next week sometime but is fine with extending it further should the FEC request so a third time. Today’s meeting has also extended the comment period on the FEC’s drafts. Check out Make Your Law’s website to learn how to officially comment on them!