The acting general counsel of the Federal Election Commission (“FEC”) recently published for public comment a draft advisory opinion under the Federal Election Campaign Act and related FEC regulations regarding mining cryptocurrencies for the benefit of political committees. According to draft Advisory Opinion 2018-13, a service provider has proposed to provide services to political committees to enable individuals to use the processing power of internet-enabled devices to mine cryptocurrencies, with the political committees receiving the mined cryptocurrency. A “political committee” is broadly defined under FEC regulations to include a wide variety of groups that have paid money or provided anything else of value to influence a federal election.
The draft Advisory Opinion cites Advisory Opinion 2014-02, which provided general guidelines for the use of digital currency by political committees. Under the 2014 Advisory Opinion, political committees may accept contributions in digital currency. They may also purchase digital currency, but political committees must sell the digital currency and deposit the proceeds into a campaign depository account before spending those funds. The 2014 Advisory Opinion also makes clear that political committees may not acquire goods and services with digital currency received as contributions.
If approved by the FEC, draft Advisory Opinion 2018-13 would permit the proposed cryptocurrency mining activities. The mining activities would, however, be deemed to result in contributions from miners and the service provider to the participating political committees, and should be accounted for accordingly. Because the activities would be deemed contributions, the FEC also tentatively concluded that any individual who is not a foreign national or federal contractor, and who is not using corporate or labor organization resources if the recipient political committee is not an “independent expenditure-only” political committee, may participate in the proposed mining pool subject to applicable contribution limits. Furthermore, draft Advisory Opinion 2018-13 would not place any limitations under federal election law (including those arising under Advisory Opinion 2014-02) on the ability of the service provider to sell cryptocurrency mined through the proposed pooling activities. The draft Advisory Opinion does not address legal requirements arising under other legal regimes, such as the federal securities or commodities laws.