At its public meeting today, the Federal Election Commission (FEC) voted unanimously to allow Make Your Laws PAC, a political action committee, to accept contributions of $100 or less in the form of bitcoins. This is the third time the FEC has considered the issue, after deadlocking on a prior request filed last year by a different PAC, and then again on Make Your Laws’ request at its last meeting.
Previously, the Commission’s three Republican and three Democratic commissioners had all agreed that bitcoin contributions should be permitted in some form. However, they were divided over how exactly the recipient should treat them, including whether they should be considered “in-kind” contributions, or “monetary” contributions similar to cash. Federal election law allows contributors to give in-kind contributions to political committees in the form of goods, services, or anything of value, as long as the fair market value of the contribution doesn’t exceed the legal limits. Cash contributions, however, are subject to a lower, $100 limit.
Since Make Your Laws sought only to accept bitcoin contributions valued at $100 or less, the FEC was able to reach an agreement without deciding whether contributions of bitcoins and similar virtual currencies are cash contributions. Instead, the FEC simply found that bitcoins constitute “money or anything of value,” and ruled that the Make Your Laws could accept bitcoin contributions as it proposed in its advisory opinion request, i.e. subject to the $100 cap that would apply to cash contributions. In doing so, as the ruling notes, FEC was able to avoid wading into the debate over the legal and regulatory categorization of Bitcoin that is already playing out in several other areas of federal law.
Two other aspects of the ruling are worth noting. First, the FEC approved Make Your Laws’ request that it be permitted to buy and sell Bitcoins for investment purposes. Second, the FEC rejected Make Your Laws’ request that it be permitted to spend the bitcoins it purchases or receives natively. Instead, Make Your Laws must convert the bitcoins into dollars and deposit them into its campaign depository account before spending the value.
The FEC specifically noted that it could not reach a majority on the question of spending bitcoins natively. It is possible that the FEC could revisit that aspect of its ruling, and/or the $100 limit, in response to future requests for rulings.