Michigan Secretary of State Nixes Crypto for Political Donations

The Michigan Secretary of State has formally barred cryptocurrencies from being used as donations to political campaigns, according to a letter published last Thursday.

Michigan state legislature candidate William Baker, who lost his race in the Nov. 6 election, asked how cryptocurrencies' value may be recorded for political donations, as well as how they may be used.

In its response, the department disagreed with Baker's premise that "It is 'self-evident' that digital currency is a valid way to receive political contributions," writing that "The 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 letter explained that the Michigan Campaign Finance Act defines contributions as a "Donation of money or anything of ascertainable monetary value," emphasizing that the value of any donation must be "Exact, precise and certain or can be determined with certainty."

"Cryptocurrency is not a mere transfer of controlled funds deposited or withdrawn through a financial institution, but rather is traded anonymously through an electronic platform. As with stocks and commodities, Bitcoin's worth fluctuates daily, there is no way to ascertain the precise monetary value of one Bitcoin on any particular day. Further the Act requires that committees deposit funds in an account in a financial institution, which is not an option for cryptocurrency."

Michigan isn't the only state to bar cryptocurrencies from political donations: California announced in September that it would also prohibit digital assets from being used.

By contrast, the Federal Election Commission ruled in May 2014 that Political Action Committees could accept small dollar amounts of cryptocurrency.

The fact that some investors can donate cryptocurrencies anonymously is another issue cited by Michigan officials, as anonymous donations are also forbidden under the act.

"Campaigns can accept donations of doughnuts and coffee, both of which are anonymous, without violating the law," he said.

Given that cryptocurrencies under the office's interpretation cannot be used in political donations, the Michigan letter declined to respond to the question about crypto exchanges.