California ends ban on Bitcoin and other crypto donations to political campaigns
by Arthur · July 23, 2022
Lawmakers in the Golden State have voted to end the ban on cryptocurrency donations to state and municipal political candidates.
The Fair Political Practices Commission (FPPC) ruled Thursday that California residents can make donations of any amount (within California’s contribution limits) in cryptocurrencies such as Bitcoin.
But don’t get too excited, anon. While accepting crypto donations may seem like California is embracing the permissionless, global and pseudonymous nature of crypto, there is a catch.
Political campaigns must immediately convert any crypto donations into US dollars, and only payment processors registered with the US Treasury Department can be used.
Furthermore, all state and local campaigns must have “adequate KYC procedures that enable it to form a reasonable belief that it knows the true identity of each contributor,” according to approved regulations, which was first launched in May. Anyone who donates cryptocurrency must also provide their name, address, occupation and employer for the donation to be considered legal and valid.
“In drafting this regulation, we had to address the inherent concern with cryptocurrency and the opportunity it presents for illegal contributions because it is inherently — intentionally, in some circumstances — anonymous, and in many cases, untraceable,” said David Bainbridge, general counsel . for FPPC, on Thursday approval meeting.
“So when we drafted this regulation we were aware of these very legitimate concerns, which is why four years ago the commission banned cryptocurrency contributions,” he added.
Under the new rules, no crypto donations can come from an anonymous or external source, presumably in an effort to prevent foreign interference.
And while it may seem like California is “adopting crypto” with this new policy, the fact remains that any crypto collected must be immediately converted to USD. In other words, the state of California wants to take your crypto, but it doesn’t seem to see any potential benefit or utility in holding it long-term.
Regardless, the approved rules were the most favorable to crypto of the other proposed options, which included keeping the ban or capping crypto donations at $100.
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