FEC Clears Campaigns to Solicit Bitcoins 
 
 By Eliza Newlin Carney 
 
 The Federal Election Commission has unanimously ruled to permit the use of bitcoins for political contributions, a move that lends legitimacy to the virtual currency but leaves unclear how valuable or useful bitcoins will prove to be in elections. 
 
 The commission approved bitcoin campaign contributions 6-0 Thursday in response to an advisory opinion request from the Make Your Laws PAC, which promotes direct citizen participation in the legislative process. The FEC had deadlocked on a previous, similar request submitted last year. 
 
 Make Your Laws had asked the FEC for permission to collect bitcoin contributions no larger than $100 per election, per donor. It was not immediately clear whether, in giving the Make Your Laws PAC the green light, the FEC was approving only bitcoin donations capped at $100, or whether larger virtual contributions would be permitted. 
 
 The FEC also approved the PAC’s request to purchase bitcoins, but only if it sells the virtual currency and converts it into dollars before depositing and spending it. The FEC also stressed the PAC’s obligation to ensure safeguards to obtain and report the identities of its donors, given the anonymous nature of bitcoin transactions. 
 
 Bitcoins have grown increasingly popular with political committees and candidates, most notably libertarians, who have forged ahead in collecting them even in the absence of approval or guidance from the FEC. Candidates and committees collecting bitcoins include Rep. Steve Stockman, R-Texas, who lost his primary challenge to Sen. John Cornyn in March, and the Livingston County Libertarians in Michigan. 
 
 A campaign that collects bitcoins that then increase in value would enjoy a windfall, but the currency comes with risks as well. Created in 2009, bitcoins are privately issued outside the normal banking system and are transferred digitally among participating investors and merchants. In a recent Investor Alert, the Securities and Exchange Commission cites the risk of Ponzi schemes, unlicensed sellers and unsubstantiated promises of high returns in bitcoin transactions. ||||| Updated at 12:49 p.m. 
 
 The Federal Election Commission on Thursday gave a green light to donating bitcoins to political committees, one of the first rulings by a government agency on how to treat the virtual currency. 
 
 In a 6-to-0 vote, the panel said that a PAC can accept bitcoin donations, as well as purchase them, but it must sell its bitcoins and convert them into U.S. dollars before they are deposited into an official campaign account. The commission did not approve the use of bitcoin to acquire goods and services. 
 
 After the vote, however, individual commissioners offered sharply divergent views on whether their decision limits bitcoin donations to small amounts -- creating more uncertainty about how much of the Internet currency that political committees can accept. 
 
 The FEC had deadlocked on a similar question in the fall, with the three Democratic appointees saying they wanted the agency to take more time to study the issue and develop a formal policy to govern the use of bitcoins in campaigns. At the time, some commissioners expressed concern that the virtual currency could be used to mask the identity of donors. 
 
 On Thursday, the panel’s vote was swift. The decision came in the form of guidance to Make Your Laws PAC, not an official rule or regulation. But it opens the door to the use of bitcoins by any federal political committee. 
 
 In its advisory opinion request, the Make Your Laws PAC said it is seeking to accept bitcoin donations in increments up to $100. 
 
 That low sum assuaged the concerns of several commissioners about the risks of the virtual currency, said Commissioner Ellen Weintraub, a Democratic appointee. 
 
 "The $100 limit was really important to us," she said. "We have to balance a desire to accommodate innovation, which is a good thing, with a concern that we continue to protect transparency in the system and ensure that foreign money doesn't seep in." 
 
 Because the commission only approved the acceptance of bitcoin as specifically described in the request by the Make Your Laws PAC, the decision does not permit contributions of more than $100, she said. 
 
 But FEC Chairman Lee Goodman, a Republican appointee to the panel, disagreed. He said that the advisory opinion treats bitcoin donations as in-kind contributions -- not official currency -- meaning that the only limits that apply are the federal caps on all forms of accepted donations. Those limit individuals to giving $2,600 to a candidate per election and $5,000 to a political action committee. Individuals and corporations can give unlimited sums to super PACs. 
 
 "To me, the opinion that the commission approved today supports the right of bitcoin users to contribute as they would all other kind things of value," he said, such as silver dollars and works of art. 
 
 "This advisory opinion in no way established the outer limit," Goodman added. 
 
 The panel was in agreement on the need for transparency about who makes the bitcoin donations. The Make Your Laws PAC pledged to obtain the name, address, occupation and employer of all bitcoin contributors -- even though those details are only required of donors who give $200 and more to federal campaigns. 
 
 The FEC advisory opinion also said that committees accepting bitcoin must report their value based on the exchange rate the day the contribution is made. Bitcoin prices were hovering near $440 on Thursday, down from roughly $530 nearly a month ago. 
 
 In its decision, the FEC concluded that bitcoins fit the definition of “money or anything of value” that political committees may accept under federal law, while noting that other government agencies, as well as the courts, are still grappling with the question of whether bitcoins should be treated like money. 
 
 “The Commission expresses no opinion regarding the application of federal securities law, tax law, or other law outside the Commission’s jurisdiction,” the election commission panel stressed in its advisory opinion. 
 
 Goodman said the FEC needed to weigh in on the debate, even though it remains unclear how the government will deal with bitcoin broadly. 
 
 "Just philosophically, I think it's important for the FEC to embrace technology and innovation, and that’s what we did today," he said. 
 
 Brian Fung contributed to this report. ||||| Mike Caldwell, a software engineer, holds a 25 bitcoin token at his shop in Sandy, Utah in May of last year. Caldwell mints physical versions of bitcoins. (Photo: Rick Bowmer, AP) 
 
 WASHINGTON — Bitcoin, the fast-growing digital currency, is coming to political campaigns. 
 
 The Federal Election Commission (FEC) unanimously approved its use as a political donation Thursday, after months of debate on the issue. 
 
 Commissioners imposed several conditions. Among them: No anonymous bitcoin contributions will be allowed, and campaign treasurers must scrutinize the donations for "evidence of illegality." 
 
 Jim Harper, global policy counsel of the industry's Bitcoin Foundation, said the FEC's move lends further legitimacy to the computer-generated currency. "It's another part of the growing body of regulation that establishes bitcoin as a co-equal part of the financial services system," he told USA TODAY. 
 
 Rep. Jared Polis, a liberal Democrat from Colorado and a bitcoin backer, immediately announced his campaign would begin accepting the digital money. He praised the FEC for its "forward-looking stance" to recognize "the rights of individuals seeking alternatives to government-backed currencies to participate in our democratic political process." 
 
 However, it's not clear how quickly the currency will spread through the election landscape. Officials with the campaign committee working to elect House Democrats said they had no immediate plans to begin accepting bitcoin. Other Democratic and Republican committees did not immediately respond to interview requests. 
 
 Political observers say they expect bitcoin's use to be embraced first by candidates cultivating voters in libertarian-leaning and tech-savvy circles where the currency first gained acceptance. "You may not see a lot of establishment candidates in the parties" rushing to accept the currency just yet, said Michael Toner, a Washington campaign-finance lawyer and a former FEC chairman. 
 
 Even without the formal approval of regulators, the Libertarian Party began accepting bitcoin about a year ago and has collected the equivalent of about $10,000, party executive director Wes Benedict said Thursday. Many Libertarians would prefer a gold-backed currency and contributing bitcoin "shows a little bit of protest against Federal Reserve policies," he said. 
 
 At the state level, Texas' Republican attorney general Greg Abbott announced last month that he would accept the virtual currency as an "in-kind" contribution to his bid for state governor. A fellow Texas Republican, Rep. Steve Stockman, accepted the currency in his failed Senate bid. 
 
 The commission is the latest federal agency to offer guidance on the digital currency, which operates independently of governments and banks. The IRS recently said it would tax bitcoin as property, not currency. 
 
 The FEC's action came in response to a request brought by a single political action committee, Make Your Laws PAC, which pledged to accept no more than $100 worth of bitcoin from each contributor per election. 
 
 The commissioners, who often are sharply divided along party lines, issued dueling statements after the vote in which they disagreed about the size of bitcoin contributions that will be allowed. 
 
 Democrats on the panel said bitcoin donations should not exceed $100, the current cap on cash contributions in federal campaigns. Lee Goodman, a Republican who serves as commission chairman, said bitcoin contributions are more like in-kind donations, such as securities or a painting, and are subject to higher contribution limits. 
 
 Toner said he expected more back-and-forth on the matter from the commission. 
 
 Dan Backer, a conservative lawyer who unsuccessfully asked the FEC to approve bitcoin use last year, said he's not waiting for a final answer. He intends to start making contributions larger than $100 to House and Senate candidates through BitPAC, a political action committee he founded. 
 
 Follow @fschouten on Twitter. 
 
 Read or Share this story: http://usat.ly/1kW6KWU ||||| The U.S. Securities and Exchange Commission is leery of bitcoin. 
 
 The agency issued a lengthy warning to investors on Wednesday about risks it sees in bitcoin and virtual currencies, much of which has been already iterated by bitcoin advocates or other regulators. 
 
 But the SEC, which is the top regulator for U.S. securities markets, also took a dig at bitcoin’s short existence as another negative. 
 
 “As a recent invention, Bitcoin does not have an established track record of credibility and trust,” the agency wrote in its advisory. 
 
 The statement perhaps conflates the pure technology of the bitcoin protocol that transfers the virtual currency, which has been vetted by cryptography experts as solid, with the nearly innumerable thefts, scams and failures of bitcoin-related businesses. 
 
 Bitcoin, which launched in 2009, has seen a fair share of challenges, including vacillating exchange rates and regulatory restrictions in countries such as China. 
 
 To back up its claim of bitcoin’s track record, the SEC cited the February collapse of Mt. Gox, the Japan-based exchange that said it lost some 650,000 bitcoins and US$28 million in cash, confirming suspicions the exchange that once dominated bitcoin trading was in trouble. 
 
 Law enforcement and the SEC may also have trouble investigating bitcoin-related cases, the warning said, since banks are not involved with bitcoin transactions and there is no central authority to obtain information on users. 
 
 The SEC must rely on other sources for information in such cases, such as bitcoin exchanges or users. Seizing and freezing proceeds that are in bitcoin can also be difficult, the SEC said. 
 
 Of course, many of those supposed weaknesses are also what makes bitcoin attractive to certain kinds of users.
– Bitcoins just got into politics: The FEC said yesterday that people can use them to make political contributions. As far as the fine print goes, any PAC that accepts them must convert them into dollars before using the money, the Washington Post reports. Also, no anonymous donations will be allowed, and campaigns must give them a good look for "evidence of illegality," USA Today reports. The grass-roots Make Your Laws PAC that made the initial request to the FEC requested a $100 limit, but at this point it's not clear whether "the FEC was approving only bitcoin donations capped at $100, or whether larger virtual contributions would be permitted," notes Roll Call. Though not an official rule, the FEC's 6-0 vote "opens the door to the use of bitcoins by any federal political committee," observes the Post. However, the move comes as the US Securities and Exchange Commission issues a warning to investors, declaring that bitcoin "does not have an established track record of credibility and trust," PC World reports.