California will now join 12 other states and Washington D.C. in allowing campaign donations in the form of cryptocurrency after a vote by the Fair Political Practices Commission this week.
The Golden State had previously been one of nine U.S. states that banned the use of digital currencies as campaign contributions. Federal campaigns can already accept Bitcoin and other digital currencies.
California’s new regulations on the matter, approved by the Fair Political Practices Commission, stipulate that in order to accept such donations, candidates must immediately convert the cryptocurrency into U.S. dollars.
The regulations are set to take effect within the next 60 days.
Since cryptocurrencies function independently from banks, they rely on a decentralized record-keeping system that tracks transactions on a network of computers, then stores those transactions in an encrypted unit known as a “block.”
These blocks are then strung together, a bit like pieces of macaroni slotted through a single string; a highly encrypted macaroni necklace. Crypto nerds call that the “blockchain” and have even managed to mainstream the term—even though many still have no clue what it means.
While the new rules surrounding cryptocurrency will likely not necessarily impact the way political campaigns are run, the adoption of blockchain technology in the political sphere does raise some questions for the future of fundraising in the space.
For one, given the decentralized nature of the blockchain’s digital ledger, the transaction records stored there are public. This means that anyone can track the activity of a given account holder—making it much easier to see if they are up to anything shady.
Perhaps, certain political campaigns could benefit from the public accountability afforded by the blockchain; others, however, might not be open to such transparency.
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