MADISON, Wis. (AP) — Wisconsin ethics officials are considering making the state among the leaders in accepting political contributions in bitcoins and other digital currencies, despite concerns about the inherent anonymity of such donations and the fluctuation of exchange rates.
The federal government, Montana and Washington, D.C., already allow bitcoin campaign contributions, but most states have been slow to embrace cryptocurrencies because the source of the donation is untraceable. Governments worldwide have also struggled to create standards for accepting bitcoin in anything other than private, commercial transactions.
Unlike campaign donations made by check or credit card, bitcoin transactions are anonymous by design, with the source tied to sometimes multiple digital addresses, not real-life names or other identifiable information. Virtual currencies are not backed by the government or other regulating body, do not have legal tender status and are entirely digital.
In addition to its senders being anonymous, the value of bitcoin — the most popular and well-known of the cryptocurrencies that first appeared in 2009 — can fluctuate wildly due to speculation. On Tuesday, bitcoin was trading for about $9,300, down from its high point of the year of around $17,000 in January.
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That fluctuating value also poses problems for campaigns that are bound by limits on how much money they can accept from any one donor.
Wisconsin Libertarian Party Chairman Phil Anderson urged the Wisconsin Ethics Commission at a hearing on the issue Tuesday to allow bitcoin donations, citing the increasing popularity of virtual currencies. Anderson, who is running for governor as a Libertarian, suggested that state policy require bitcoins be immediately converted to dollars and then reported as an in-kind contribution.
“There are people that want to use it as money for contributions,” Anderson said.
Wisconsin ethics commissioners expressed concerns about how to regulate cryptocurrencies, citing the anonymity of the donations, whether it would be treated like cash or an in-kind gift and how the value would be calculated given fluctuations in the market value.
The Federal Elections Commission in 2014 voted to allow bitcoins and cryptocurrencies as an in-kind contribution — a gift of goods and services rather than money — but states have been slower to embrace the digital money citing concerns about anonymity. When the FEC offered guidelines, but no rules, the value of a bitcoin was just over $400.
Montana allows for bitcoin contributions, but they must be converted to U.S. dollars upon receipt. The state prohibits candidates from maintaining bitcoin wallets, akin to a checking account, to be tapped to pay for other campaign expenses or services.
Washington, D.C., has a similar policy allowing for bitcoins to be used as in-kind contributions assessed at the current local fair market value.
Other states have been less welcoming.
Kansas ethics regulators last year rejected the use of bitcoins, citing secrecy concerns. In California, its ethics commission doesn’t have a formal policy but has advised against accepting bitcoins and other cryptocurrencies because the public and enforcement agencies would not be able to tell the true source of the contributions.
The Wisconsin Ethics Commission took public testimony Tuesday but took no immediate action. It could vote on adopting a policy later, ask for guidance from the attorney general, suggest that the state Legislature deal with it or take no action.
Follow Scott Bauer on Twitter: https://twitter.com/sbauerAP