Kansas ethics panel says no to Bitcoin contributions, at least for now

? The Kansas Governmental Ethics Commission said Wednesday that for the time being at least, the digital currency known as bitcoins are simply too secretive and untraceable to be allowed as a form of campaign contributions in state and local elections.

Mark Skoglund, who recently took over as executive director of the commission, asked the commission for its guidance Wednesday, saying he had received a request from a candidate who wanted to know whether it was legal to accept campaign contributions in bitcoins.

“Bitcoin is a digital currency,” he explained. “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.”

Skoglund did not identify who the candidate was who made the request.

First introduced in 2009, bitcoins have gradually been gaining acceptance as an alternative form of currency, used mainly for online purchases. But governments around the world have struggled to come up with standards for accepting that currency in anything other than private, commercial transactions.

In 2014, however, the Federal Election Commission issued an advisory opinion that said, under limited conditions, federal campaign committees could purchase bitcoins as investments, and they could accept them as a form of contributions.

However, the commission noted, “Holding bitcoins in a bitcoin wallet does not relieve (the committee) 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.”

So far, Skoglund said, no state ethics commission has issued a ruling allowing bitcoins to be used in state and local elections, although the issue has been considered in Texas and California.

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

“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.”

“It’s totally contrary to the transparency we’re asking for our political system to provide to the public,” he added.