Last Week At The FEC: Continued Delay On Bitcoins

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Last week the Federal Election Commission met in executive session and held an open audit hearing on the Democratic Party of Illinois as well as an open meeting where it discussed various draft advisory opinions related to Make Your Laws PAC’s request that it approve a framework within which political committees may accept contributions made in bitcoins.

Bitcoin Request Delayed, Anonymity Concerns Remain Key Issue

During its open meeting on April 23, commissioners questioned MYL PAC founder Sai closely regarding the anonymous nature of bitcoin contributions and how the PAC would differentiate bitcoins from other potentially anonymous contributions such as cash or in-kind goods. That discussion centered on how a bitcoin donor’s identity could be determined within the virtual currency’s current framework.

Commissioner Ellen Weintraub suggested that these specific issues should be addressed in a rulemaking, but that MYL PAC’s request could be approved in its current form because the request includes a self-imposed $100 limit on bitcoin contributions, which is the same as the current statutory limit on cash contributions. Alternatively, Commissioner Lee Goodman expressed concern that giving a “yes” answer on this limited basis might result in the promulgation of an improper legal analysis under which bitcoins would be treated as cash, despite recent IRS rulings to the contrary.

Though the commission appeared supportive of approving the PAC’s specific request, Vice-Chair Ann Ravel asked that the commission hold over debate further while she works with the commission staff to draft a third, hybrid draft that combines elements of current drafts A and B of the commission’s proposed advisory opinion, which this blog discussed last week.

Audit Reports to Continue to Focus on State Committee Staff Payroll Logs

During its open meeting, the commission also approved two audit division reports related to the Nebraska Democratic Party and the State Democratic Executive Committee of Alabama. Among other issues, those two reports focused on recordkeeping requirements for employees paid with state and federal funds described at 11 C.F.R. §106.7, which the commission has previously concluded requires state parties to maintain an hourly time log for all employees paid with federal funds.

Although the commission has found that such logs must be maintained even if an employee is paid entirely with federal funds, and reported as such, in these instances the commission once again exercised its prosecutorial discretion not to seek any penalties in such instances. Employee recordkeeping has been a major focus of the audit division recently, which this blog discussed in reference to four related audit reports approved early last month.

Meeting Schedules

The commission is scheduled to meet in executive session on Tuesday, May 6 and in open session on Thursday, May 8. Agendas have not yet been released for those meetings, but the commission will continue to consider the proposed draft advisory opinions on bitcoins discussed above.

Topics:  Bitcoins, FEC, PACs, Virtual Currency

Published In: Elections & Politics Updates, Finance & Banking Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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