California Reverse Ban on Crypto Donation for Elections
- California intends to become a leading hub for cryptocurrencies.
A new law in California will soon permit candidates for state and local offices to accept donations in cryptocurrency, a few years after it was banned. The state’s Fair Political Practices Commission (FPPC) announced a reversal on the ban, which was placed in 2018.
Due to perceived concerns with transparency and Know Your Customer (KYC), nine jurisdictions, including California, previously outlawed political contributions made in cryptocurrency. Over the past few months, there have been calls for a reversal, with several people calling for a more friendly crypto policy.
The FPPC later issued a report in May that evaluated three alternatives for its crypto policy. These options were to keep the ban in place or to treat cryptocurrencies like fiat, with a $100 donation cap, which is the case in many jurisdictions.
The final alternative was to treat cryptocurrency donations as in-kind contributions, which means that they should be treated as goods or services rather than financial contributions, with the conditions that they must pass through a processor that adheres to KYC protocols and that they are converted into fiat within two business days after they are received. Furthermore, the worth of the donation would be determined by the cryptocurrency’s dollar exchange rate on the day of the donation.
The third choice appeared more appealing than the others and was approved by the FPPC in its recent ruling. As a result, California now joins the other 12 states to permit political donations made in cryptocurrencies. The ruling will come into play in the next 60 days.
This news will undoubtedly come as a huge relief to crypto enthusiasts in the state. Most US states are growing warm to cryptocurrencies, and California has been one state that is fully embracing crypto projects.
The state’s senate received a bill in February that allows the state government to pay for services with cryptocurrency. The committee rejected the bill but gave room for a rehearing. Like most US states, California has been considering ways to increase crypto adoption in the state. However, with regulation.
Gov. Gavin Newsom recently signed an executive order directing state agencies to work with the federal government to develop laws for digital currencies. This order followed a plan set forward by President Joe Biden in March. Additionally, it urged officials to consider integrating more extensive blockchain computer coding into the functioning of the government.
California has a population of around 39 million people and a $3.1 trillion economy, making it larger than both the UK and India. The state’s governor said his order will make California the first state to develop “a comprehensive, thoughtful, and harmonized regulatory and business environment for crypto assets.”
Although California is attempting to be the first state to set up a comprehensive approach to crypto, Ohio was the first state to try accepting digital currencies for government services in 2018. Unfortunately, the initiative was quickly halted due to low usage.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
