Introduction

A bitcoin logo is displayed at the April 2014 Inside Bitcoins conference and trade show in New York. Bitcoin users exchange cash for digital money using online exchanges, then store it in a computer program that serves as a wallet. The program can transfer payments directly to merchants or individuals around the world, eliminating transaction fees and the need for bank or credit card information. Mark Lennihan/AP

After months of fits and starts, the Federal Election Commission today unanimously ruled that federal political committees may accept a limited amount of Bitcoin to fuel their election efforts.

But the decision left open as many questions as it answered about the digital currency, which in political circles has been particularly popular among candidates and committees with libertarian streaks.

That’s because the commission, in voting 6-0, ruled in a relatively narrow fashion on an request from a single political action committee known as Make Your Laws PAC.

So what does the ruling mean both for this one PAC — and all others? A primer:

The FEC decided that federal political committees may accept $100 worth of Bitcoin per election, per contributor. Committees “should value that contribution based on the market value of bitcoins at the time the contribution is received,” the ruling states.

What if Bitcoin skyrockets in value after a political committee accepts its $100 worth? Bully for the committee. Say $100 worth of Bitcoin today steadily appreciated to a point where it was worth $10,000 at the year’s end. A political committee would then find itself with — and could use — that $10,000 worth of Bitcoin. The FEC notes that “earnings (or losses) realized upon the sale of any bitcoins … must be reported like other investment earnings or losses.”

There’s a catch: While committees may accept Bitcoin in its native form, the Make Your Laws PAC proposed that it could “either sell its bitcoins or disburse bitcoins to purchase goods and services.” The FEC agreed that the sale of Bitcoin, and its conversion into dollars before being used, is legal. Liquidated Bitcoin must be deposited, in dollar form, into its campaign account within 10 days. But the FEC could not reach an agreement on whether political committees may directly “purchase goods and services with bitcoins it has received as contributions.” In other words, the FEC isn’t allowing committees to make purchases with actual Bitcoin. But it isn’t prohibiting them from doing so, either.

In a related matter, the FEC ruled that “purchasing goods or services with bitcoins” that a political committee has purchased with campaign cash is “not permissible under Commission regulations.”

Federal law states candidate committees may this cycle accept $2,600 per election from individuals. But the FEC’s Bitcoin ruling only OKs acceptance of $100 worth of Bitcoin. That’s largely because the Make Your Laws PAC only asked to accept $100 per election per person. The FEC’s decision is neutral on whether committees may accept up to $2,600 worth of Bitcoin per election per person. In other words: Accept more than $100 per election at your own risk.

How about super PACs, which may raise unlimited amounts of money to advocate for or against politicians? Could they accept unlimited amounts of Bitcoin? Again, the FEC’s decision did not speak to this issue. It remains an open question.

Must Bitcoin contributions be disclosed publicly? Yes, the FEC ruled, regardless of whether Bitcoin users want to remain anonymous. The Make Your Laws PAC told the FEC that it will “provide a unique linked address by which an individual may make a bitcoin contribution only after that contributor provides his or her name, physical address, and employer, and affirms that the contributed bitcoins are owned by him or her and that the contributor is not a foreign national.” The commission said this level of disclosure “adequately addresses” the committee’s “obligations to determine the eligibility of its contributors as required” by federal election laws and rules.

One important caveat, however: Since the FEC didn’t rule on whether committees are allowed to directly spend Bitcoin on goods and services, it states in its ruling that “the Commission is not addressing how such purchases might be reported.”

Will the FEC consider Bitcoin contributions to be currency? Cash? And in-kind political contribution? That’s not crystal clear. Its ruling states that Bitcoin fit into its “anything of value” definition, which includes in-kind contributions. Democratic Commissioner Ellen Weintraub notes the ruling “doesn’t take a position on whether they are more like cash or in-kind.” But in an interview, Republican Chairman Lee Goodman said, “we’re telling the regulated community that we’re treating bitcoins like in-kind contributions.”

Could the FEC further regulate Bitcoin? Most certainly, although there’s no immediate indication that it will. As the commission notes in its ruling, “the analysis or conclusions in this advisory opinion may be affected by subsequent developments in the law, including, but not limited to, statues, regulations, advisory opinions and case law.”

Read the FEC’s full opinion here.