February 18, 2014

Last Week at the FEC: Commission Asked to Approve a Framework for Acceptance and Use of Bitcoins

Holland & Knight Eyes on Washington Blog
Andy Emerson

Last week the Federal Election Commission did not meet, but made public AOR 2014-02, an Advisory Opinion Request from Make Your Laws PAC (MYL PAC) related to Bitcoins, as well as a Final Audit Report related to the North Dakota Republican Party and administrative fines levied against two political committees.

Clarification Sought on How a PAC May Go About Accepting Bitcoins

In AOR 2014-02, MYL PAC has asked the Commission to temporarily approve a proposed framework for accepting, buying, accounting for, and selling Bitcoins. The PAC has requested approval of its framework, which is outlined extensively in its request, because of concerns regarding how to fulfill the Commission's "best efforts" requirements for identifying contributors, and other issues related to the anonymity of Bitcoin transactions.

Late last year, the Commission deadlocked during consideration of AO 2013-15, a request from Conservative Action Fund asking whether it could lawfully accept Bitcoins as a form of contribution or distribute Bitcoins to pay for goods and services. Although the Commission was unable to approve any of the four draft opinions produced by its staff, discussion amongst the Commissioners during their November meetings appeared to indicate that they would be willing to allow Bitcoins as a form of in-kind contribution.

Beyond the fact that it effectively returns this issue to the Commission's agenda for 2014, MYL PAC's request is also notable because of its detailed explanation regarding how the technology underlying Bitcoin transactions limit political committees ability to properly identify the source of contributions, as well as the infeasibility of engaging in such transactions without paying a fee to an anonymous "Bitcoin miner."

It is unclear that anything at the Commission has changed since November that would prompt it to overtly approve Bitcoin transactions in this case. However, MYL PAC's decision to highlight potential transparency issues is certain to result in additional informative discussion regarding the potential use of virtual currencies by federal political committees.

Audit Report and Administrative Fines

The Commission also made public a Final Audit Report related to the receipts and expenditures of the North Dakota Republican Party (NDRP) for the 2009-2010 election cycle. That report followed an investigation by the Commission's Audit Division staff, which was prompted by NDRP amending its reports an average of four times per reporting period during that election cycle. The Final Audit Report concluded that NDRP had both materially understated its disbursements and failed to disclose debts and other outstanding obligations.

The Commission released the results of two enforcement matters resolved through its administrative fine program. In AF 2632, Friends of Liberty for Jessica was fined $550 for failing to file its 30 Day Post General Report after the 2012 election, during which it made disbursements of roughly $14,500. In AF 2744, the Commission assessed a civil penalty of $9,749 against Jim Renacci for Congress after it determined that the Committee failed to disclose a loan of $96,393.90 that Congressman Renacci made to his Committee within the 48-hour reporting window. The proposed penalty in this latter case was determined at a rate of $110 per missed filing plus ten-percent (10%) of the overall contributions not reported during the applicable period.

Meeting Schedule

The Commission is scheduled to meet in executive session on Tuesday, February 25 and to hold an open meeting on Thursday, February 27. Agenda documents for those meetings have not yet been released. 

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