California has passed a law that allows state and local political candidates to receive cryptocurrency donations.
The new law, which will focus on effect in 60 days and, according to LA Times, was passed after the California Fair Political Practices Commission, a body that regulates campaign finance and government ethics to promote transparency in government, accepted the new requirement.
Under the new law, applicants can receive donations in crypto as long as they can immediately convert digital goods into fiat currency. In addition, the law stipulates that the applicant must work with companies registered to handle the transaction, which, in turn, must perform essential Know Your Customers (KYC) practices, such as collecting the name, address, taxpayer’s occupation, and employer.
Politicians running for federal office are also allowed to receive crypto donations. Most states are generally reluctant to allow this contribution due to challenges such as transparency, market volatility, and lack of regulation.
Previously, California had banned the contribution of cryptocurrencies, like eight other states, but decided to join Washington DC in allowing donations.
In addition to politics, several destinations for cryptocurrency donations have emerged in recent months, despite regulatory ambiguity. According to a report published by Finbold, there was a 583% increase in digital asset donations in 2021 compared to 2020.