California has passed a new law enabling state and local office political contestants to receive donations in cryptocurrency.
California has passed a new law enabling state and local office political contestants to receive donations in cryptocurrency, which will take effect in 60 days. It was adopted after the state's Fair Political Practices Commission approved the new requirement, reports Finbold. Under the new law, candidates can receive donations in cryptocurrencies if they can immediately convert digital assets into fiat.
The law stipulates that this candidate must work with a registered cryptocurrency processor to handle the transaction. The processor must also perform essential Know Your Customer (KYC) practices like collecting the contributor’s name, address, occupation, and employer.
Notably, politicians running for federal office are currently allowed to receive donations in cryptocurrency. In general, most states are divided on allowing campaign donations of cryptocurrencies, citing issues such as transparency, market volatility, and a lack of regulations.
Previously, the U.S. Federal Election Commission shared an advisory regarding Bitcoin contributions to campaigns. It states that committees can receive Bitcoin provided they liquidate the asset. However, the FEC has stated that holding Bitcoin does not relieve political committees of their obligation to return a contribution if it is from a prohibited source and exceeds the contributor's contribution limit.
The FEC notes that crypto donations have been allowed in federal elections since 2014. However, some state governments have opposed the idea by passing laws prohibiting donations. The Commission added that political committees should value digital currency contributions based on market value when a donation is made.
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