The Michigan Department of State has determined campaign donations cannot be made in cryptocurrency, according to a letter published by the department on November 8.
In September of this year, Michigan State Legislature candidate William Baker wrote a letter to the department outlining why he felt politicians in the state should be allowed to accept digital currency from campaign supporters.
In the letter Baker states, "It should be self-evident that digital currencies are a valid way to receive political contributions, the main issues yet to be resolved are how to record their value and how to use them once they have been received." He later states:
"[W]ith some modest record keeping, donations of digital currencies can be an additional method of raising funds for political campaigns in the coming years, just as the internet first allowed political based websites to collect credit card donations roughly twenty to twenty-five years ago."
In the response letter to Baker, the department "respectfully" disagrees with Baker's claim, saying it is not "self-evident" that crypto should be considered a viable way to "receive political contributions" because Michigan law does not "authorize such a vehicle" and the department "has never determined that digital currencies are a valid way to receive political contributions."
The department gives several reasons why it determined that contributions may not be made in digital currency; the first reason is the volatility of the price.
According to the Michigan Campaign Finance Act (MCFA), a contribution is defined as "a payment, gift, subscription, assessment, expenditure, contract, payment for services, dues, advance, forbearance, loan, or donation of money or anything of ascertainable monetary value, or a transfer of anything of ascertainable monetary value."
To justify this ruling, the department uses the Merriam-Webster Dictionary definition of the word "ascertain," which is "to find out or learn with certainty; to make certain, exact, or precise." Because the price of digital currency changes quite frequently, the department declares it cannot be given an "ascertainable monetary value."
It's worth stating that Michigan politicians are permitted to accept non-monetary donations, which, much like cryptocurrency, rarely hold an "exact, or precise" value. However, the Michigan Department of State expressed concern that the volatile price of cryptocurrencies make it difficult to accurately report contributions. The letter ends by stating:
"New regulations would need to be passed to direct committees regarding the valuation of cryptocurrency in order to comply with contribution limitations set forth in the Act. The Act as currently written simply does not contemplate this type of regulatory scheme, and absent such direction from the Legislature, the Department cannot find that committees may accept contributions made via Bitcoin."
The Michigan Department of State also maintains that crypto is not fit for political campaign donations because the department's earlier rulings state that "a committee must only hold its assets in a financial institution and is barred from using other investment vehicles for the purpose of depositing contributions and making expenditures."
Accepting digital currency as donations in political campaigns is a hotly debated topic, with several states seeming to have different ideas. In May of this year, it was reported that politicians in Colorado may be able to accept digital currency as campaign contributions in the near future. In August, New York congressional candidate Patrick Nelson reported that he was accepting campaign donations in crypto. And in October, the Kansas Governmental Ethics Commission told politicians in the state to "not accept bitcoin at this time until further study can be conducted."