FEC ruling paves way for Bitcoin political donations

The Federal Election Commission voted Thursday to allow political committees and candidates to accept donations in the form of Bitcoins, a virtual currency that can be exchanged online without the assistance of a bank or another third party.

FEC commissioners unanimously approved an advisory opinion stating that Bitcoins can be donated to candidates and committees, provided they are subject to the same transparency and accountability rules governing other forms of donations.

"The Federal Election Commission must embrace new technology and innovation," wrote FEC Chairman Lee Goodman in explaining the decision. "While bitcoins may be a novel medium of exchange, the regulatory questions they raise are not. The Commission historically has regulated the in-kind contribution of many different things of value donated to campaigns, ranging from barter credit units to securities to silver dollars to works of art. Bitcoins are not different in any material respect from these kinds of contributions and can be regulated in the same manner."

The ruling limited the Bitcoin donations a committee or candidate could accept to $100 per person, per cycle. It also required people donating Bitcoins to enumerate their name, address, and employer to prevent a violation of campaign finance laws -- because the currency can be donated without any assistance from a bank, it can be more difficult to track and audit.

The ruling also stipulated that campaigns and committees could not purchase goods or services using the virtual currency - they can accept Bitcoins, but they must convert the virtual currency into standard currency before using it to buy anything.

Bitcoin proponents lauded the ruling as a victory for innovation and civic participation.

Rep. Jared Polis, D-Colo., emailed supporters Thursday urging them to "join the fight for freedom" and donate to his campaign using the virtual currency.

"I am honored to serve in Congress and be in a position to do my best to prevent efforts to ban or restrict digital currencies," he wrote. "I believe that Bitcoin, and other digital currencies, are just beginning to show the world what a tremendous tool they can be; whether it is reducing transaction costs in developing nations or giving people more options for engaging in commerce. Digital currencies have the potential to break down the barriers that traditional banking institutions have put in place."

Polis told TIME Magazine that he's raised "well over" $1,000 in less than 24 hours since he began soliciting donations in the wake of the FEC ruling.