FEC: Crypto Mining Donations is a “Permissible” Way to Support Political Candidates


Finding ways to show financial support for political candidates has been changing a lot since cryptocurrency came into the picture. Though the use of Bitcoin has been permitted recently, there has not been any other method to involve cryptocurrency in political contributions that was officially accepted. However, in a recent draft from the U.S. Federal Election Commission (FEC), a new option available is found in mining cryptocurrency.

The memorandum that approved this option came out on November 13th, and the process of mining is meant to be an effort of supporting the candidate that the miner favors. According to the memo, this determination was made as a result of a proposal that the OsiaNetwork LLC submitted. They requested that individuals have the option of mining cryptocurrency with their own processing power of their devices. The funds generated from this process would be contributed to the desired political committee.

The original goal was that the OsiaNetwork would get approval to use these processes to count as volunteering. However, the FEC did not seem so keen to sign off on this type of use case at the moment. The letter specifically says that the proposal “is permissible,” based on the criteria it must meet. However, “it does not fall within the volunteer internet activities exception and would result in contributions from both the individuals and the OsiaNetwork to the participating political committees.”

Basically, OsiaNetwork has the ability to setup a mining pool. However, their campaign contributions would count as both the miners and the startup participating in it. The preliminary ruling is both a loss and a win for OsiaNetwork. When they submitted their first request, they noted that “the term ‘contribution’ does not include the value of services provided without compensation” by volunteers.

However, the Federal Election Campaign Act requires some level of communication to be considered proper “internet activity.” The advisory opinion continues, saying,

“Because participation in OsiaNetwork’s cryptocurrency mining pool does not constitute an ‘internet activity’ as defined in the regulation due to the lack of a communicative element, the use of an individual’s computer and internet access to participate in the mining pool would not fall within the exemption regardless of the fact that computers and means of internet access are included in the definition of ‘equipment and services.”

Furthermore, the fundraising would be treated no differently than if volunteers raised funds through a third-party vendor, if the OsiaNetwork operates the mining pool. Basically, OsiaNetwork would count as a contributor with the miners.

The memo notes that, if the OsiaNetwork creates a contribution that is bigger than what the individuals contributed with their mining, they would be considered to be donations through a partnership. However, the vote for this opinion will not occur until December 19th, 2018.

According to CoinDesk, there has yet to be a response from OsiaNetwork LLC’s legal counsel about this matter.

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