Federal Election Commission Seeks Public Comment On The Use Of Bitcoins As Political Contributions

by Perkins Coie
Contact

A political action committee has sought an advisory opinion from the Federal Election Commission (FEC) as to whether bitcoins can be accepted as political contributions and, if so, how bitcoins should be characterized and valued by recipients.[1]  The FEC is accepting comments on the request until September 16, 2013.  A decision from the FEC is expected by October 28, 2013.[2]    

The FEC’s consideration of the request is significant because it will mark only the second time that a U.S. government agency has publicly considered the nature of bitcoins.[3]  An FEC ruling that bitcoins can be accepted as campaign contributions would, at least implicitly, constitute recognition that bitcoins are a legitimate alternative form of currency, which could in turn further broaden their use.  A ruling limiting or precluding bitcoin contributions, however, could create a drag on the growth of the virtual currency industry. 

The FEC’s ruling is also potentially significant in that the FEC has been asked to weigh in on a number of questions that go to the nature of bitcoins and how they should be valued.  Recognizing that current FEC regulations mandate that monetary contributions be treated differently than in-kind contributions (which may include stocks, bonds and intangible goods),  the request seeks guidance regarding whether bitcoin contributions should be treated as  monetary or in-kind contributions.  The request contends that bitcoins resemble both monetary and in-kind contributions in various ways and asks the FEC to rule that bitcoin contributions may be treated as either (consistent with the applicable rules governing receipt and disposition), at the election of the recipient.  The request then poses more specific questions about how bitcoin contributions should be valued under either scenario, including whether bitcoins treated as in-kind contributions can be held indefinitely for future sale and, if so, at what point they should be valued for purposes of reporting and complying with donation limitations.  

How the FEC rules on these questions of how bitcoins should be characterized and valued could have implications beyond the narrow confines of election law.  While the FEC’s ruling will not be binding on other federal agencies considering whether and how to regulate bitcoins, it may certainly be cited as relevant precedent.  For example, if the FEC were to characterize bitcoins as in-kind contributions analogous to stocks or commodities, this characterization could influence the future consideration of bitcoins by the Securities and Exchange Commission and the Commodity Futures Trading Commission, both of which have indicated that they are reviewing their possible jurisdiction over bitcoins.[4]  Such a ruling could also create questions about inconsistencies with the Financial Crimes Enforcement Network’s (FinCEN) March 18, 2013 Guidance interpreting the status of virtual currency under the Bank Secrecy Act (BSA) and the anti-money laundering (AML) rules adopted under the BSA.  FinCEN found that while decentralized virtual currencies lack legal tender status, they have many of the attributes of currency, and accordingly held that decentralized virtual currency should be treated like legal tender for purposes of AML regulation.  That ruling could be clouded if the FEC were to rule that bitcoins are not “money” as defined under its regulations.

If you are interested in filing comments with the FEC, or would like to discuss doing so, given the September 16, 2013 deadline, we recommend you contact counsel as soon as possible. 

For more information on Perkins Coie’s virtual currency practice and important topics regarding virtual currency, click here.

[1] See http://saos.nictusa.com/aodocs/1245451.pdf.

[2] Pursuant to 2 U.S.C. § 437f(a)(2), the FEC must issue its advisory opinion within 60 days of receipt of the complete request.

[3] See Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies, FIN-2013-G001 (March 18, 2013).

[4] One federal district court recently held that, under certain circumstances, bitcoin investments may constitute “investment contracts” subject to the SEC’s regulatory jurisdiction.  See, e.g., http://www.perkinscoie.com/court-maintains-bitcoin-related-investment-scheme-is-a-security-under-the-federal-securities-laws-08-08-2013/#footnote2point2.

 

Written by:

Perkins Coie
Contact
more
less

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!