As we enter another election season, California has become the latest state grappling with the role of cryptocurrencies in campaigns.

On Thursday, the California Fair Political Practices Commission debated — but ultimately did not decide among — three proposals governing whether candidates in the state could accept campaign donations in cryptocurrency, including one that would cap the maximum donation at the equivalent of $100. The California commission will return to the topic in its next meeting in September.

While the Federal Election Commission essentially gave the green light to crypto donations in federal elections back in 2014, California is the latest state to consider regulations limiting digital currencies in state and local elections. Last October, for example, a similar commission in Kansas prohibited crypto contributions in that state, arguing the anonymity bitcoin (BTC) provides conflicted with efforts to ensure transparency.

“It’s totally contrary to the transparency we’re asking for our political system to provide to the public,” Kansas Governmental Ethics Commissioner Jerome Hellmer said at the time.

In California, a representative of a bipartisan political advocacy organization argued Thursday that the state commission should take its time understanding the issues, saying that until there’s time to consider “the traceability of the source of donations, there’s not enough evidence to adopt a blanket rule on cryptocurrency.”

“It’s an emerging issue, and states are still [examining] it,” Nicolas Heidorn, policy and legal director of California Common Cause, tells ThirtyK. “There is no clear consensus on it.”

A Long History

Given New Hampshire’s libertarian bent, it’s not surprising that the first candidate to accept crypto donations was from that state. Back in 2014, unsuccessful Republican gubernatorial candidate Andrew Hemingway claimed that as much as 20 percent of his initial contributions were in bitcoin. “I think by nature the currency trends significantly young and tech-savvy, so that’s my base,” he told CNBC at the time.

Congressional candidates soon followed, including a Colorado Democrat named Jared Polis. Today, he’s running for governor of the state on a platform that includes attracting the blockchain industry to Colorado.

Like California, Colorado is considering draft rules allowing crypto in local elections.

Looking to the 2020 presidential election, entrepreneur Andrew Yang, who is running for president on a platform including a universal basic income, is the first in the field to follow in the footsteps of previous presidential candidates such as Sen. Rand Paul of Kentucky, who announced he was accepting crypto contributions for his 2016 campaign.

On the federal level, the FEC’s 2014 advisory letter essentially places crypto on the same footing as other “in-kind” donations, although contributions are banned when they involve “a prohibited source, that exceeds the contributor’s annual contribution limit, or that is otherwise not legal.”

Disclosure

Campaigns aren’t the only crypto-related issues facing lawmakers. In June, the House Ethics Committee ruled that members of Congress must disclose any holdings of crypto worth more than $1,000 in their annual financial disclosures, just as they are required to report other assets, including real estate, stocks, and other investments.

Rep. Bob Goodlatte, a Republican from Virginia, may have been the first to do so, reporting as much as $80,000 in crypto holdings in his annual disclosure form.

Along with disclosing investment holdings, the House committee also included actively mining for crypto among the outside jobs that are subject to an annual limit of about $28,000. To date, it’s not clear whether any members of Congress have done that.

James Rubin contributed to this report.
Mark Toner
Mark Toner is a Washington, D.C., writer and editor. He has covered business, technology, media, education, and healthcare for a wide range of trade and industry publications.