At yesterday’s public meeting, the Federal Election Commission discussed an advisory opinion request on Bitcoin contributions. The requestor, Make Your Laws PAC (MYL PAC), sought to accept bitcoins as contributions, as well as purchase, sell and trade them. The FEC’s Republican and Democratic members were divided over whether to classify bitcoin contributions as in-kind contributions, or to cap them at $100 – the current limit on cash contributions. After a brief discussion, the Commissioners agreed to hold over a final decision on the request for a future meeting.
In advance of today’s meeting, the Commission released two draft responses to the request. Both drafts held that bitcoin contributions should be permitted. However, Draft B stipulated that bitcoin contributions should be limited to $100 because they “raise similar concerns to cash contributions, which are limited … due to their untraceability and the ease with which they may be used for illegal purposes.” Draft A, on the other hand, would have treated bitcoin contributions as in-kind contributions, which are not subject to the $100 limit. The two drafts also took differing positions as to whether MYL PAC should be permitted to spend bitcoins to acquire goods or services. Both drafts would have allowed MYL PAC to purchase bitcoins as investments, and both proposed a similar system under which it should determine the value of bitcoin contributions for reporting purposes.
At the outset of the discussion, Commissioner Weintraub clarified that MYL PAC had submitted a follow-up to its initial request, in which it confirmed that MYL PAC will accept “only $100 worth of Bitcoin per election per contributor,” “based on how Bitcoin’s auditability compares with that of cash vs other mediums of exchange like checks.” Commissioner Weintraub also expressed, as she has in response to other advisory opinion requests on the issue, that she would prefer to tackle the issue of bitcoin contributions in the context of a rulemaking.
Commission Vice-Chair Ravel, stating that “Bitcoin allows for anonymous and untraceable” contributions that are analogous to those made in cash, expressed strong support for a lower, $100 limit on bitcoin contributions. Referencing the recent “Silk Road” investigation, Ravel also expressed concern that the Commission would be unable to verify whether contributed bitcoins had been used for illegal purposes. However, she also said that she agreed with “some general approaches” in Draft A, including its proposed method for valuing bitcoin contributions, and its provision that a committee should be permitted to purchase them as investments. For that reason, she suggested that the Commissioners hold over a vote on the matter and attempt to draft an alternative response.
Commission Chair Goodman responded to Vice-Chair Ravel by arguing that bitcoin contributions are analogous to other items that can be contributed in-kind to committees, including securities or bonds, and that an electronic record of the transaction would be present in the case of a potential audit. He also said that in light of IRS notice 2014-21, which held that bitcoins should be treated as property for federal tax purposes, the Commission should do the same and recognize their transfer to a political committee as an in-kind contribution.