The Federal Election Commission (FEC) is proposing to allow federal candidates to receive digital donations, though the agency plans to prohibit campaigns from spending the virtual currency known as bitcoin.
The FEC’s draft guidance responds to a request from the Conservative Action Fund (CAF), a political action committee wishing to accept bitcoin donations.
{mosads}“The Commission concludes that CAF may accept Bitcoins as in-kind contributions under valuation, reporting, and disbursement procedures, as described below,” the FEC said in its advisory opinion. “CAF may not, however, make disbursements using Bitcoins.”
Instead, the agency said federal candidates that receive bitcoins as donations must sell them and deposit the proceeds in their campaign coffers before they can be used.
The opinion drew praise from Sen. Tom Carper (D-Del.), chairman of the Senate Homeland Security and Governmental Affairs Committee, who commended the commission’s acknowledgement that virtual currencies are not going away.
“Their emergence has potentially far reaching implications for the federal government and society as a whole,” Carper said in a written statement. “I applaud the FEC for acting quickly to recognize this and develop a thoughtful policy that gives donors and committees rules of the road to utilize this emerging technology.”
Carper said the Senate panel, in its upcoming meetings, would discuss what a “whole government” approach to virtual currency would look like.
Bitcoins exist only online but can be used to buy real-world goods and services, and are accepted by a growing number of Internet retailers.
Proponents of allowing bitcoins in politics say they expect it be in wide use during the 2014 cycle and argue political campaigns should be able to tap into the currency’s growing popularity.
Some campaigns are already accepting the currency, particularly libertarians who would prefer a reduced federal government role in the monetary system.
Backers of CAF’s proposal said they were confident that the FEC would allow bitcoins in politics, just as they agency has allowed donations made by automatic bank transfer, online credit card payment or even text message.
The new guidance, issued late Thursday, lays out a set of proposed regulations for how bitcoins are to be accepted, valued and reported.
The commission will accept public comments on the proposal until Nov. 13 and is expected to vote to approve it later this month.
— This story was updated with additional information at 10:45 a.m.