Colorado May Allow Cryptocurrency For Campaign Financing Despite Accounting Problems

The Denver Post is reporting that politicians in Colorado may soon have another option when it comes to raising funds for their campaigns. Secretary of State Wayne Williams has proposed that cryptocurrency donations to candidates be permitted. The proposal is in step with a decision by the Federal Election Commission to allow Bitcoin donations for US candidates at the federal level. New Hampshire was the first U.S. state to allow cryptocurrency donations. Political candidates in New Hampshire have been able to receive donations of digital tokens since 2014. It is unclear just how many donors have taken advantage of the option since it has been available. The general consensus is that campaign funds raised with cryptocurrency amount to a very low percentage of overall fundraising. The reason for this may be the complexities that campaigns face in accepting digital tokens. The process of making a donation is easy for the contributor, but integrating cryptocurrency with other types of campaign finance is problematic for candidates. Bitcoin and other digital tokens must be treated as cash. Their value is determined at the time the donation is made. Campaigns then have 10 days to transfer the cryptocurrencies to their official accounts. This means that the funds must be exchanged for fiat currency. Exchanging cryptocurrency for cash can be a tedious process. Some political candidates are likely to conclude that providing a crypto donation option is not worth the effort required to process the transactions. Colorado has stated that it is aware of the potential accounting problems this will pose for candidates, but the state feels it is an appropriate path given the decision of the FEC. Colorado lawmakers have a troubled relationship with cryptocurrency, having recently struck down legislation which would have established identification guidelines for digital tokens. The lawmakers would need to approve the proposal regarding cryptocurrency donations before state guidelines can be changed.