The California Fair Political Practices Commission voted Thursday to allow state campaigns to accept cryptocurrency donations, reversing a four-year ban on the donations.
Since 2018, California has been one of nine states to not allow cryptocurrency donations to campaigns. The FPPC had originally prohibited the donations over concerns with tracking crypto donations and political transparency. While those running for Federal office were still allowed donations, California remained steadfast.
However, cryptocurrencies, such as bitcoin and ethereum, have gone through numerous changes in the last four years and have gained wider acceptance. While the cryptocurrency market is now facing a more uncertain future with crypto prices crashing in the last several months, the Californian legislature has proposed legislation allowing residents to pay for more things with the currency. The greater adoption paved the way for the FPPC ruling on Thursday.
California is now one of 13 states, plus the District of Columbia, that have local rulings allowing crypto political donations. However, California’s new rules state that all crypto donations must immediately be converted to US currency following donations, with candidates legally having to keep a register of the name, address, occupation and employer of every contributor. The news crypto donation rules will also take effect within 60 days, meaning candidates can begin receiving bitcoin donations by mid-September, just in time for the fall elections.
“The FPPC is still being very cautious about these donations,” said Greg Thornton, an accountant who has worked on several state campaigns, to the Globe on Friday. “They’re basically treating this like any cash donation, but with extra steps, like the conversion. This also stops the campaigns from speculating themselves with the currency, like holding onto the crypto until it rises in value again. This bill stops all that.”
“I’m not sure about the long-term viability of this. Crypto adoption had been doing well until earlier this year. Now, everyone is selling it off it seems, and the people who had been chanting that crypto is the future and things like “Hodl” are now very quiet. It is good to see alternate donation types to come out, especially easy to transfer ones like cryptocurrencies. But we still need to keep an eye on it and make sure that no one is cheating the system. This is still a relatively new thing, and we need to make sure it is safe and sustainable for campaign donations. One wrong donation here and it could turn into a scandal, especially if the name of the person who donated isn’t put down for it, which has been a big concern.”
“But lets just give this more time too. The FPPC is playing cautiously and we should too. A lot of donors, especially younger donors, might like the ease of giving this way, but in the end, it will be all cash anyway. It’s not the car you’re taking, it’s ultimately the destination.”
Crpyto donations are expected to go out to state campaigns sometime in the next two months.