Kansas panel rejects bitcoin campaign contributions

The digital currency known as bitcoin is too secretive to be allowed as a form of campaign contributions in state and local elections, the Kansas Governmental Ethics Commission said.

The commission's decision Wednesday came after Executive Director Mark Skoglund said he received a request from a candidate wanting to know whether it was legal to accept campaign contributions in bitcoins, the Lawrence Journal-World reported .

"Bitcoin is a digital currency," Skoglund said. "There is no physical manifestation of this currency in any way. It's just alphanumeric characters that exist only online. It is not backed by any government. The value is subjective and highly volatile. However, there are millions of people who utilize bitcoin."

Bitcoin was first introduced in 2009 and is has gradually been gaining acceptance as an alternative form of currency used mainly for online purchases. But governments worldwide have struggled to create standards for accepting bitcoin in anything other than private, commercial transactions.

The Federal Election Commission issued an advisory opinion in 2014 saying federal campaigns could purchase bitcoins as investments and could accept them as a form of contributions under limited conditions.

But the commission noted that having bitcoins does not relieve the campaign "of its obligations to return or refund a bitcoin contribution that is from a prohibited source, that exceeds the contributor's annual contribution limit, or that is otherwise not legal."

Skoglund said that no state ethics commission has issued a ruling allowing bitcoin to be used in state and local elections.

Commissioner Jerome Hellmer said bitcoins are too risky to be allowed in Kansas elections without standardized reporting procedures.

"The greatest problem would be the strong probability of the influencing of local elections by totally unidentifiable lobbyists trying to come in," he said. "If you think the Russians affected the presidential elections, just wait. This is what's going to happen."

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Information from: Lawrence (Kan.) Journal-World, http://www.ljworld.com