The Federal Election Commission (FEC) in the US has been asked to decide whether bitcoin donations can be used in political campaigns.
Lawyers for Conservative Action Fund PAC (CAF) wrote to the commission on whether political candidates are allowed to accept donations in bitcoins as well as dollars.
The request, which was written by Dan Backer of campaign finance and political law firm DB Capitol Strategies, also asks the commission to clarify whether CAF may then sell or directly spend any bitcoin donations it receives.
"As increasing numbers of individuals trade in bitcoin, political parties and candidates also wish to accept and spend this new currency," the letter reads.
Backer goes on to explain that the Libertarian Party now accepts bitcoin contributions, as does Mark Warden, a New Hampshire State Representative. "We welcome bitcoin donations. We support currency freedom!" Warden's website states.
Eric Olson, a former Libertarian candidate in North Dakota, and Jeremy Hansen, a former independent state Senate candidate in Vermont also set up systems to accept bitcoin contributions online.
"CAF, a political action committee, wishes to do the same – while complying with all relevant campaign finance regulations," the request continues.
The letter asks the FEC to answer 24 questions relating to the use of bitcoins as political contributions, including: "Does the FEC consider bitcoin a currency or a good?" and "How should CAF report the expenses, if any, relating to the sale of the bitcoins, such as commissions or fees?"
The request concludes:
"CAF wishes to accept bitcoins as monetary and in-kind contributions from individuals and organizations otherwise lawfully able to contribute. CAF also intends to sell, spend, and directly contribute these bitcoins.
These actions are similar to those permitted by other Advisory Opinions, including BARTERPAC and Cogswell, and the FEC should have no concern in permitting them. So CAF can ensure compliance with FECA and FEC regulations, CAF seeks guidance on valuing, retaining, selling, spending, and contributing bitcoins received as contributions."
Warden – the New Hampshire State Representative – said he decided to start accepting bitcoin donations because many people in his social and professional circles use the digital currency.
"I'd known about the digital currency for over a year before somebody suggested I accept campaign donations in bitcoin. It was a great opportunity to not only find a new source of support for my campaign, but also to give more validity to the cutting-edge cultural phenomenon," he explained.
Warden said he didn't seek legal advice before starting to accept bitcoin donations, but he asked the New Hampshire Secretary of State's office for an opinion.
"They didn't fully understand the concept, but said it was fine as long as I followed the standard reporting requirements for candidates, which include the name and address of donors over a certain cumulative value donated."
He expects the FEC will consult with the IRS and the treasury before responding to the CAF's letter. He also predicts the commission will not like the anonymity of bitcoin donations, but believes they will likely state that small contributions without clear identifiers are acceptable.
"Since bitcoins aren't recognized as money by the Feds, they may say that bitcoin contributions are in-kind – not monetary – donations," he added.
In the 2013-2014 campaign cycle, individuals are allowed to donate up to $2,600 to candidates per election and $5,000 to any other political committee per calendar year.
According to FindTheData.org, the CAF raised $352,541 in 2012, which equates to around 2,674 bitcoins at the Mt.Gox exchange rate at the time of writing.