WASHINGTON — The Federal Election Commission voted Thursday to allow political committees to accept bitcoin donations and outlined the ways that the virtual currency can be used by federally regulated campaigns.
Responding to a request from a political action committee, the commissioners unanimously approved an advisory opinion that defined bitcoins, which allows for online transactions without going through a bank or other third party, as “money or anything of value” — in essence, cash or an in-kind contribution.
They also imposed some restrictions, ruling that bitcoin donations will be capped at a cash equivalent of $100 per person per cycle, with the value determined at the time of the donation, and that a complete accounting of name, address and origin must accompany the donation.
Committees can liquidate a bitcoin contribution immediately, or they can choose to keep it as an investment, in the same way they do with stocks and bonds. Since the value of the virtual currency can fluctuate suddenly, the opportunity for a windfall is real, but is growing rarer as it stabilizes.
The opinion also allows committees to buy bitcoins on the open market, but prohibits them from using the coins to pay for goods or services. They must be liquidated into US currency before being spent.
“Clearly, for me it’s significant that the requester has only asked for $100 in bitcoin contributions,” said Ann M. Ravel, the vice chairwoman of the commission. “And so it is good that we can give some guidance to the community in respect to that amount of money that is not going to raise some of the bigger issues that might come with bitcoin transactions.”
The ruling is both an acknowledgment of the currency’s growing popularity and a move to protect against efforts to circumvent campaign finance laws. Bitcoins can be difficult to trace, potentially opening the gates to both illegal and foreign money.
Although the opinion provides some clarity for campaign committees, it is not likely to lead to a deluge of bitcoin donations.
“Besides the compliance burden, it’s an invitation for a headache,” said David Mitrani, an associate at Sandler Reiff Lamb Rosenstein & Birkenstock in Washington who specializes in federal and state campaign finance law. “It’s creating more work where potentially you wouldn’t have to create more work.”
Still, the introduction of a new source of financing could be important to some smaller campaigns and committees, especially those with significant backing from libertarians, who have embraced the currency. The Libertarian Party has already built a small but loyal bitcoin donor base, receiving $10,000 to $20,000 a year in the currency.
Those in the political technology sector have also been preparing for the introduction of bitcoins into the political sphere.
Targeted Victory, a digital strategy firm that does work for Republicans, helped the campaign of Greg Abbott, a Republican candidate for governor in Texas, set up its bitcoin operation. NGP VAN, a technology company for Democratic and liberal candidates, has developed a bitcoin integration for its applications and had been waiting for further guidance from the election commission before releasing it.