California’s Fair Political Practices Commission (FPPC) has banned politicians running for public office from accepting electoral campaign donations in cryptocurrency.

The five-member watchdog voted three to one in favour of this, mainly due to concerns over tracking the origin of crypto funds as well as political transparency issues.

The FPPC released a statement in which it says “there was extensive research by staff, input from stakeholders that was publicly displayed on our website and public debate among the Commission and that is the decision rendered”.

Staff research and voting options

Five options were put forward. The first one was to ban crypto donations. The second one was to permit contributions of up to $100 worth of crypto. The third option contemplated permitting crypto donations “in-kind”, which means they have to be converted into cash. The last option was to allow donations without the “in-kind” requirement.

The FPPC opted for the first option saying it was consistent with the campaign activity FAQs from 2014, which states that “staff have done extensive research on the topic and recommend that committees not accept Bitcoins or other digital currency as campaign contributions at this time”.

Further debate on the issue

However, the commission left the door open, noting “there will be further debate and analysis in the coming months and years”. The decision goes against a US Federal Election Commission ruling that allows candidates to accept Bitcoin and other crypto donations. The decision dates back to 2014.

The state of South Carolina is the only other US entity that has prohibited cryptocurrency donations. Colorado has ruled in favour.