Crypto Donations to Increase California Politicians’ Chances of Winning Elections
Cryptocurrency for political campaign contributions will now be allowed in California, after a ban was lifted by the state’s Fair Political Practices Commission on Friday.
The FPPC has voted to lift a four-year cap on bitcoin contributions. In 2018, California was one of nine states to specifically ban the practice, according to an FPPC staff report.
With the latest decision, California joins 12 states that specifically allow cryptocurrency donations.
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Crypto-to-cash conversion is part of the deal
The rules dictate that campaigns turn digital currencies into cash as soon as they receive them. According to an Associated Press report, campaigns must use a “registered cryptocurrency processor” to obtain standard donor information.
Based on a staff report, certain measures are required to prevent money laundering and limit contributions to political parties.
The newly enforced guidelines will be established within 60 days, the report states.
Image: Orange County Breeze
Cryptocurrencies are independent of banks. Instead, blockchain technology is used to digitally record transactions. State and federal regulations mandate the collection of names, addresses, occupations and employers of all donors.
California leads in Bitcoin adoption
In other contexts, California has been a pioneer in Bitcoin acceptance. In February, legislation was proposed in the state senate to allow cryptocurrency payments for government services.
That measure failed on a procedural vote, but a reconsideration was allowed, which has yet to take place. In May, Governor Gavin Newsom issued an order to unify the state’s rules with the digital assets executive order issued by US President Joe Biden.
Crypto total market cap at $98 billion on the daily chart | Source: TradingView.com
On March 9, Biden signed an EO that highlighted the risks associated with exploiting the potential benefits of digital currency assets and their underlying technologies.
Top presidential campaign donor
Sam Bankman-Fried, CEO of the crypto exchange FTX, was one of Biden’s top donors for the 2020 presidential campaign. According to estimates, the billionaire CEO’s election expenses in 2024 could reach $1 billion.
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The California Department of Financial Protection and Innovation, which oversees state-licensed financial institutions, declared last week that it will investigate whether virtual asset companies that froze withdrawals and transfers violated the law.
Cryptocurrency remains a very divisive topic, with skeptics claiming it is a buzz in the market fad and nothing more than a get-rich-quick scheme.
Interestingly, certain leaders, including the president of El Salvador, the mayor of New York City and the mayor of Miami, have warmly welcomed the technology, while others have called for it to be reined in; China, for example, has outright rejected the use of crypto.
Featured image from Money, chart from TradingView.com
