WASHINGTON — Will digital dollars soon fund U.S. political campaigns?
If a conservative political action committee has its way, supporters will be able to donate to federal elections using bitcoins, a relatively new form of virtual currency.
The Conservative Action Fund PAC this week asked the Federal Election Commission to approve rules governing the use of this online form of currency. The move seeks to push the technology envelope for federal regulators who just last year endorsed political donations via text message for the first time.
The FEC has 60 days to respond to requests such as these but can extend the amount of time it takes to consider the matter.
“As bitcoins become a bigger part of the economy, we see a future in this … particularly among libertarian-minded voters,” said Dan Backer, the Conservative Action Fund lawyer who filed the FEC request.
Bitcoins and other online currencies allow users to transfer assets from virtual “wallets” without using banks or other financial institutions. The transactions make it easy to move money globally. They incur no fees and are difficult to trace.
Although the currency isn’t recognized by any nation, the global bitcoin market this year exceeded $1 billion in value.
The use of bitcoins to finance campaigns raises an array of technical and legal issues, Backer said.
For instance, bitcoins are traded like currency and their value against the U.S. dollar can fluctuate wildly. Campaigns are required to report donations that exceed $200 to federal regulators. How should a political committee handle a bitcoin contribution of $199 that jumps in value to $205 by the time the deposit hits the committee’s campaign account?
Another question: Because the currency also can be treated as a commodity, like gold, can a political committee hold on to bitcoins indefinitely? The FEC already allows committees and candidates to accept in-kind contributions of stocks and retain them for an unlimited time period, potentially paving the way for similar treatment of the online currency.
The PAC also wants to use bitcoins to pay some of its vendors.
“It’s a complex area of law,” Backer said. “We want to make sure we do this right.”
The request comes as virtual currencies face greater federal and state scrutiny. Last month, the top Democratic and Republican lawmakers on the Senate Homeland Security Committee announced plans to take a deeper look into online currencies and sent letters to several federal agencies, asking for more details on how they oversee the currencies.
The once-obscure industry has increased its presence in the nation’s capital.
Late last month, officials with the Bitcoin Foundation, a non-profit industry group, met with Treasury Department officials to “open up a dialogue,” said Patrick Murck, the group’s general counsel.
The foundation started a year ago and has about 1,000 members, Murck said. He said the group plans to begin lobbying more actively to make sure policymakers better understand bitcoin, which he said is best described as a “protocol for storing and transmitting value across the Internet.”
The industry group supports its use in political campaigns, Murck said.
Some candidates aren’t waiting for regulators to approve the currency switch.
Darryl Perry, who is seeking the Libertarian Party’s 2016 presidential nomination, earlier this year issued an open letter to the FEC announcing that he would not accept donations in “currencies recognized by the federal legal tender laws.”
Instead, Perry said, he will accept donations only in precious metals, bitcoins or another form of online currency, litecoins. Perry, who said he does not believe the FEC has any authority to regulate federal campaigns, also announced that the letter would be his campaign’s “last communication” with the agency.