Kansas Commission Rejects Bitcoin Campaign Contributions

Announcements, News, Regulation | October 27, 2017 By:

The Kansas Governmental Ethics Commission (GEC) is advising politicians to not accept bitcoin as a form of campaign contribution, saying it is too secretive and untraceable.

The GEC is planning to study the issue further, but for now, politicians are being told to abstain from taking bitcoin contributions in the state and local elections.

The guidance came after Mark Skoglund, the commission’s executive director, received a request from a candidate querying the legality of accepting bitcoin contributions.

“Bitcoin is a digital currency,” said Skoglund. “There is no physical manifestation of this currency in any way. It’s just alphanumeric characters that exist only online. It is not backed by any government. The value is subjective and highly volatile. However, there are millions of people who utilize bitcoin.”

Commissioner Jerome Hellmer said that until standardized reporting procedures are put in place, campaign contributions using bitcoin will not be allowed.

“The greatest problem would be the strong probability of the influencing of local elections by totally unidentifiable lobbyists trying to come in,” said Hellmer. “If you think the Russians affected the presidential elections, just wait. This is what’s going to happen.”

The Kansas election watchdogs’s decision is contrary to the Federal Election Commission’s opinion. In 2014, the FEC issued an advisory opinion saying federal campaigns could purchase bitcoins as investments and could accept them as a form of contributions under limited conditions.

“Bitcoins will be regulated like in-kind contributions,” the FEC said “So the commission effectively took the same position that the IRS has taken, that bitcoins are in kind property; they are not US currency.”

The GEC, however, noted that having bitcoins does not relieve the campaign “of its obligations to return or refund a bitcoin contribution that is from a prohibited source, that exceeds the contributor’s annual contribution limit, or that is otherwise not legal.”