From California to Colorado: How US Regulates the Political Donations in Crypto

On Sept. 20, the crypto community was rattled by the news that California's political campaign regulator ruled in favor of an outright ban of any and all cryptocurrency donations.

The potential solutions outlined in the document represented the whole range of regulatory approaches: a blanket ban on using crypto for campaign contributions and campaign expenditures; capping crypto contributions at the same level as cash donations; requiring that cryptocurrency contributions be converted to fiat and deposited to a campaign's single account; allowing committees to establish separate cryptocurrency accounts and make expenditures from them; classifying cryptocurrency contributions as in-kind and thus removing the cash cap.

The only policy option that staffers explicitly recommend against instituting is treating crypto donations as in-kind while permitting campaigns to maintain separate digital cash wallets.

Rather, the nonprofit stands with the option that proposes to subject crypto contributions to the same regulations as those in cash - with a $100 cap per donor and a requirement to convert crypto to cash before depositing.

Apparently, the majority concluded that the standards of openness and traceability that inform the Political Reform Act cannot be met with crypto contributions.

In July 2018, Colorado Secretary of State approved amendments to the Campaign and Political Finance Rules that first mentioned cryptocurrency contributions.

In Massachusetts, the rules governing cryptocurrency donations to political committees are summarized in a January 2014 letter that the state's Office of Campaign and Political Finance produced in response to Massachusetts Pirate Party PAC's request of an opinion on the issue.

Receipt of crypto contributions is permitted, but expenditures can only be made out of a 'primary campaign depository,' hence there can be no such thing as the candidate's official crypto wallet.

In South Carolina, the House Legislative Ethics Committee resorted to formal reasons when substantiating their decision to recommend against crypto campaign donations last April.

Does the most recent California ban mean that Brian Forde is not getting any more donations in support of his congressional bid from fellow crypto entrepreneurs? Not at all.