California Bans Bitcoin Campaign Donations—For Now

If you were planning to give a Californian politician your bitcoin, you’re fresh out of luck.

On Thursday 20 September, a watchdog with oversight for political finance voted 3-1 to ban all donations in bitcoin and other cryptocurrency for political campaigns, with immediate effect.

The vote was made by the Fair Political Practices Commission (FPPC), a five-member independent, non-partisan commission with responsibility for the administration of the Political Reform Act. Passed in California in 1974, the Act specifies a number of regulations on financing, conflicts of interest, lobbying, and ethics in political campaigning.

In the view of the FPPC, interpreting these specifications in light of developments in digital finance supports the position that cryptocurrency donations are not acceptable:

“There’s concern over the traceability and transparency of where [cryptocurrency donations] originate from,” said Jay Wierenga, communications director for the FPPC, told BREAKER. “Under the Political Reform Act, one of the main principles is that the public has a right to know where the true source of campaign funding is. That’s a basic tenet of the law, and the fact that it’s not as clear with cryptocurrency—there are concerns over that aspect.”

According to Wierenga, the ban on cryptocurrency donations could be reconsidered at some point in future, should the technology change (or perhaps attitudes toward it).

“There may be steps that are taken to make things more transparent than they are right now,” Wierenga said. “Up until that point, [the FPPC] felt this was the best situation, especially considering an election is only a couple of months away.”

With the motion having been adopted and passed by the commission, cryptocurrency donations to political campaigns are no longer permitted as of the date of the vote. That means candidates in the coming state elections won’t be able to solicit contribution from any of the numerous cryptocurrency traders and entrepreneurs of San Francisco and Silicon Valley, unless they’re processed through more conventional channels.

In taking this anti-cryptocurrency measure, California joins states like South Carolina, which has banned cryptocurrency donations entirely, and Colorado and Montana, which allow them with certain restrictions.

At a federal level, donations in cryptocurrency remain permissible provided they are declared according to campaign finance reporting stipulations; but for the Golden State, using bitcoin to bring out the vote will be off limits for a while.

“Things can always change, but for now, that’s the way it is,” Wierenga said.