By Grant Ferowich

A Kansas ethics board barred bitcoin contributions to political campaigns made in the form of bitcoin in defiance of Federal Election Commission advisory guidelines.

An undisclosed candidate requested the Kansas Governmental Ethics Commission to approve the legal status of bitcoin contributions. First reported by the Lawrence Journal-World, Mark Skoglund, executive director for the commission, contended that bitcoins are too cryptic to be permitted in the political process and could open the door for foreign actors to meddle in state and local politics.

The FEC issued an advisory opinion in 2014 approving of bitcoin as a way to contribute to political action committees. The commission decreed PACs could even buy and sell bitcoins with campaign funds “for investment purposes.”

The state board cited concerns that bitcoin contributions allow too much anonymity and lack adequate reporting procedures. The contributions  run “contrary to the transparency we’re asking for our political system to provide to the public,” Jerome Hellmer, Kansas ethics commissioner, said October 25.

“Cash donations are the untraceable thing in politics,” Nick Spanos, chief executive officer at Blockchain Technologies Corp, told the FR.

The FEC has already addressed Hellmer’s concern that “the greatest problem would be the strong probability of the influencing of local elections by totally unidentifiable lobbyists trying to come in.”

PACs are required to “employ several bitcoin-specific safeguards to meet its obligations despite the potentially anonymous nature of bitcoin transactions,” and these safeguard must include disclosures of the contributor’s name, physical address and employer. Such disclosures affirm “that the contributed bitcoins are owned by him or her and that the contributor is not a foreign national.”

Further, the FEC provided an example for how PACs ought to go about receiving bitcoin contributions, knocking down arguments that there aren’t robust reporting procedures.

The FEC states PAC treasures are mandated to “keep account of, among other things, all contributions the committee receives, the name and address of any person who makes any contribution in excess of $50 along with the date and amount of such contribution, and certain additional information regarding any person who makes contributions aggregating to more than $200 during a calendar year.”

Responsibility for ensuring bitcoin funds are not illegally contributed falls on committee treasurers. “If, after deposit, the contribution cannot be determined to be from a legal source, the treasurers must refund the contribution within 30 days of the receipt of the deposit or the discovery of illegality (if not initially apparent upon receipt),” the federal advisory opinion said.

The Ferowich Report is an independent news and analysis information service based in Washington, D.C. Please send inquiries and feedback to ferowichreport@gmail.com.

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