Mar 15, 2023
Kansas Introduces Bill to Cap Crypto Donations at $100
Cryptocurrency donations to political campaigns have been a subject of debate for many years now. With the increasing popularity of digital assets, governments around the world have been struggling to find the right balance between promoting innovation and protecting democratic systems. On Jan. 25, the Committee on Elections introduced a bill to the Kansas House of Representatives that would cap political donations via crypto at $100. This is just the latest in a series of attempts to regulate the use of crypto for political donations.
The FEC’s 2014 Rule and a $6,600 Cap
In 2014, the United States Federal Election Commission (FEC) was the first to address the topic of crypto donations. At the time, Bitcoin (BTC) was worth around $300 and the FEC decided to treat crypto donations as “in-kind contributions”. This meant that the donations were capped at the same amount as cash donations, with a basic limit of $3,300 for the primary and the same amount for the general election. However, there is an exception for Political Action Committees (PACs) and Super PACs, which can accept unlimited amounts of donations.
In 2022, the FEC also approved the use of nonfungible tokens (NFTs) for political campaigns. ERC-20 tokens issued by Omar Reyes were deemed to be souvenirs with no monetary value and were allowed to be used in an incentives program for his congressional campaign.
Kansas and California
In the 2020s, when crypto had become a major issue for global regulators, the mood shifted and countries like Ireland and Kansas began to discuss the possibility of banning crypto donations to political campaigns. In April 2022, Ireland became the first European country to officially prohibit political donations in crypto. Kansas is now considering a bill that would cap donations at $100 and require campaigns to immediately convert received crypto into U.S. dollars.
On the other hand, California has lifted its ban on crypto donations and candidates for state and local offices are once again allowed to accept donations in cryptocurrency. The state’s Fair Political Practices Commission (FPPC) decided to go with the original FEC prescription and treat donations in crypto as in-kind contributions.
Crypto Donations in 2024
The FEC has not issued any major updates on crypto donations since 2014, despite the huge growth in the crypto industry since then. Martin Dobelle, co-founder and CEO of Engage Labs, believes that the FEC’s ruling has been “a good rule and has allowed crypto political donations to be made successfully”. Anthony Georgiades, co-founder of Pastel Network, agrees that the time for some updates on crypto donations has come.
Terrence Yang, managing director of Swan Bitcoin, is not so optimistic about the chances of getting the updates from the FEC by the next electoral cycle. He points out the polarized nature of the current political configuration and believes that it is unlikely any crypto election laws will be passed.
However, Georgiades believes that there is still reason to be optimistic about the future regulation of crypto donations. With the increasing understanding of the technology, regulators are becoming more adept and recognizing where crypto has the potential to impact campaign fundraising. It will just take time and education to get there.
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