The state of Colorado is considering the use of cryptocurrencies to fund campaigns of political candidates. The Secretary of State, Wayne Williams, presented the proposed guidelines to the officials who are now looking for input from the residents.
Colorado is not new to testing experimental laws. The state allows the recreational use of cannabis long before other states even thought about it and gained some valuable tax revenues as well. This week, the politicians are considering yet another landmark proposal which related to digital assets. The Rocky Mountain state is pondering on the use of digital assets like bitcoin for providing donations to political candidates.
The draft was proposed on May 16th. It reads, “A committee may accept contributions in cryptocurrency, up to the acceptable limit for a cash or coin contribution. The amount of the contribution is the value of the cryptocurrency at the time of the contribution. The committee must report any gain or loss after the contribution as other income or receipts.”
The Deputy Secretary of State, Suzanne Staiert talked to the Denver Post, explaining the details of this proposal. She confirmed that the “FEC is doing it now” adding, so we are just going along for the ride.”
However, the FEC itself could have a hard time in bringing this proposal to life. The cryptocurrency donation could create a huge accounting problem for them. Staiert acknowledged this in her interview and said, “It’s going to be an accounting problem, potentially, for campaigns who want to use it.”
There are several reasons why this could happen. First, crypto transactions could be anonymous. This means that no one will know how or where the money is coming from. Additionally, there would be a problem of conversion of crypto coins to fiat money. Note that there aren’t many places where cryptos could be used directly. So, fiat money conversion will be essential for the candidates.
The volatility of the digital coins is very high which means that they could go through several aggressive swings in value. One coin could fetch an entirely different amount in the morning than it could in the evening. As they are bought and sold like securities, the valuation on paper and the actual value received upon selling them could also be slightly different. Then there are federal regulatory oversights in this matter that will have to be handled by the candidates.
But this is not the first time someone has accepted cryptocurrency donations for funding their political companies. Earlier, Jared Polis, a US Rep., D-Boulder, accepted $2,000 in donations for his campaign in bitcoin core (BTC) in 2014. Gary Johnson and Rand Paul are among the other few who have accepted funding through bitcoins. As per reports in news.bitcoin.com, the largest ever BTC donation to a political candidate was made in December this year. This payment was made to Austin Peterson, a US Senate candidate who accepted 0.284 BTC valued at $4,500.
The state will not work on the proposal immediately. It is asking state residents for comments before they make an official decision on this matter.
