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Legislators in the golden state have voted to end the ban on cryptocurrency donations to state and municipal political candidates.
The Fair Political Practices Commission (FPPC) ruled Thursday that California residents can make donations of any amount (within California’s contribution limits) in cryptocurrencies such as Bitcoin.
But don’t get too excited, anon. While accepting crypto donations may seem like California is embracing the permissionless, global, and pseudonymous nature of crypto, there’s a catch.
Political campaigns must immediately convert any crypto donations into U.S. dollars, and only payment processors registered with the U.S. Department of Treasury can be used.
Furthermore, all state and local campaigns must have “adequate KYC procedures that enable it to form a reasonable belief that it knows the true identity of each contributor,” according to the approved regulation, which was first initiated back in May. Anyone who donates cryptocurrency must also provide their name, address, occupation, and employer in order for the donation to be considered legal and valid.
“In drafting this regulation, we had to address the inherent concern with cryptocurrency and the opportunity it presents for illegal contributions because it is inherently—intentionally, in some circumstances—anonymous, and in many circumstances it’s untraceable,” said David Bainbridge, general counsel for the FPPC, in Thursday’s approval meeting.
“So in drafting this regulation we were cognizant of these very legitimate concerns which was the reason the Commission four years ago prohibited contributions by cryptocurrency,” he added.
Under the new rules, no crypto donations can come from an anonymous or outside source, presumably in an effort to prevent foreign interference.
And while it might seem like California is “adopting crypto” with this new policy, the fact remains that all crypto collected must be immediately converted to USD. In other words, the state of California will take your crypto, but it doesn’t appear to see any potential benefit or utility in holding it long term.
Regardless, the approved rules were the most favorable to crypto out of the other proposed options, which included keeping the ban or capping crypto donations at $100.