The recent approval gives the illusion that people are adopting cryptocurrencies, but contributors must immediately convert donations into US dollars. The FPPC has argued that concerns that crypto assets might help circumvent contribution limits and rules against cash from foreign donors.
The California Fair Political Practices Commission (FPPC) recently ruled residents could make cryptocurrency donations within established limits.
However, they must immediately convert the donated crypto assets into US dollars through payment processors registered with the Department of the Treasury. The FPPC said the government would collect the personal and labor data from the taxpayers making the crypto donations for greater transparency in the process.
They also pointed out that state and local campaigns must have adequate KYC procedures to know the identity of all contributors. Therefore, any contributor wishing to donate cryptocurrencies must provide their name, address, occupation, and employer for the donation to be legal and valid.
David Bainbridge, a lawyer for the FPPC, said they had to address the inherent concern with cryptocurrencies and the opportunity they present for illegal contributions. He stressed that the untraceability due to their anonymity led them to ban cryptocurrency contributions four years ago.
The recent approval of crypto donations in California gives the illusion that people are adopting cryptocurrencies for the long term. However, this is not the case here, as contributors must immediately convert all donations into US dollars.
Various experts consider that the conditions approved by the FPPC were the most favorable for cryptocurrencies. They highlighted that the other alternatives included banning them or limiting donations to minimum amounts below USD 100.
Cryptocurrency Donations to Political Campaigns are Not New
The FPPC banned cryptocurrency donations in 2018, arguing that crypto assets might help circumvent contribution limits and rules against foreign cash donors. However, cryptocurrency donations to political campaigns are not a new method in the United States.
Senator Kirsten Gillibrand recently stated she received about USD 150,000 worth of cryptocurrencies from over USD 1.3 million donated. Several important figures in the crypto ecosystem, like Sam Bankman-Fried (SBF) and the Winklevoss twins, are among the contributors.
While SBF donated USD 5,800, FTX.US President Brett Harrison contributed USD 2,900. Besides, executives from well-known cryptocurrency hedge funds like Kyle Samani of Multicoin Capital and his co-founder, Kyle Samani, jointly gave USD 19,400.
Some donors also had ties to cryptocurrency platforms Uniswap Labs, Meta, Andreessen Horowitz, HODL PAC, dYdX, and Andreessen Horowitz.
The donations to Gillibrand also came from cryptocurrency-focused units of traditional financial institutions. Tuong Vy Le, chief policy officer at Bain Capital, donated USD 1,000, while Amy Odenberg, director of emerging markets at Morgan Stanley, donated USD 1,500.
Some months ago, Bankman-Fried said it might contribute up to USD 1 billion in the next presidential election.
The new rules will enter into force in two months. While California was among 9 US states banning cryptocurrency campaign contributions, New York and Washington DC, among others, have allowed them.
By Alexander Salazar
