California has reversed a 2018 decision to ban digital currency donations to political campaigns. The reversal of the prohibition was the ruling of the state’s Fair Political Practices Commission (FPPC) on Thursday after almost four years.
Virtual currency donations were banned by California and nine other states, including South Carolina, for their potential to flout Know Your Customer (KYC) processes and their anonymous nature.
Since the statewide ban by the FPPC in 2018, heated debates about the decision cropped up, with the latest taking place in March over the sale of non-fungible tokens (NFTs) for campaign purposes. As the conversations reached a fervent pitch, the FPPC penned a report on the future of digital currency donations in the state’s political scene.
The report was famous for suggesting three solutions. The first was to maintain the status quo with the ban remaining unchanged, while the second was the imposition of a hard cap of $100 while handling such digital currency donations as cash.
The commission adopted the third option that involved lifting the ban and treating virtual asset donations to political campaigns as “in-kind contributions.” The new rule requires the donation to be converted to fiat currency within two days of the donation and be done through a platform that uses industry-standard KYC process and anti-money laundering (AML) requirements.
The decision will come into effect in 60 days and will allow donations to candidates running for only state and local offices. With this, California joins the growing league of states that permits digital currency donations to politicians.
California joins the pack in terms of digital currency adoption
Although California might be late to the party in terms of political donations, it still manages to blaze a trail. Early this year, the Bear Flag State was close to passing a bill permitting citizens to pay bills using virtual assets. Although the bill did not sail through, another hearing has been scheduled.
Gavin Newsom, California’s governor, plans to streamline the state’s blockchain regulations to that of the executive order issued by President Joe Biden. Newsom’s plans of ensuring uniformity were passed through the executive order n-9-22 and the new California Consumer Financial Protection Law designed to create a consistent environment for Web 3 companies.
“We’re getting ahead of the curve on this,” Newsom said. He added that the state’s moves were “laying the foundation to allow for consumers and businesses to thrive.”
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