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Friday, January 27, 2023

California Allows Crypto Contributions

While seven states still prohibit it, the Fair Political Practices Commission of California has overturned a 2018 ban that resulted from transparency and KYC issues.

California’s FPPC removed a restriction on accepting bitcoin contributions on Thursday, allowing candidates for municipal and state elections to once again accept them. It was prohibited in 2018.

State Of California Had Previously Banned Crypto

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Due to perceived concerns with transparency and KYC, nine jurisdictions, including California, have outlawed political donations made in cryptocurrency. As soon as the commission released a statement on the sale of NFTs for fundraising the campaign in March, the debate about donations made in cryptocurrency was once again raised.

The FPPC issued a paper in May that looked at three alternatives for its crypto policy. These options were to keep the prohibition in place or to treat cryptocurrencies like currency with a $100 donation maximum, which is the case in many jurisdictions.

The 3rd option was tregard cryptocurrency donations as in-kind contributions, which means that they should be treated as goods or services rather than financial contributions, with the conditions that they must pass through a processor that adheres to KYC protocols and that they be transformed into fiat within 2 business days of receiving the receipt. The donation value would be determined by the cryptocurrency’s dollar exchange rate on the day of transmission.

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The third choice was accepted by the FPPC in its ruling on Thursday. California has now joined the other 12 states that specifically permit political donations made in cryptocurrencies. In 60 days, the decision becomes effective.

In other ways, California has been ahead of the curve when it comes to using crypto. In February, a bill was brought to the state Senate that would let people pay for govt services with cryptocurrency. That bill was voted down by a committee, but it was given a second chance to be heard. This has not happened yet. In May, Gov. Newsom signed an executive order to make sure that state rules on digital assets were the same as President Joe Biden’s.

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