Regulating Crypto in Campaign Finance: The Need for FEC Guidance

Introduction

Over the past several Congressional sessions, lawmakers have devoted increasing attention to regulating cryptocurrency and digital assets. Recent legislative proposals focused on market structure, financial stability, and the allocation of regulatory authority among financial regulators. 

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As seen in the GENIUS Act, stablecoins have emerged as a central point in efforts to construct a hybrid financial framework that blends elements of traditional banking oversight with novel fintech-based digital asset products. The CLARITY Act addresses a different dimension of digital asset regulation by delineating jurisdiction between the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”). Importantly, the legislation would reduce regulatory uncertainty for market participants by clarifying which digital assets fall within the securities laws and which are subject to commodities regulation. 

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Notwithstanding these efforts, Congress has devoted comparatively little attention to how digital asset products, including stablecoins, fit into our current federal campaign finance regime. As policymakers focus on the structure and supervision of digital asset markets, the implications of these technologies for political fundraising and campaign finance law remain largely unaddressed.

Current System

Despite longstanding concerns about untraceable “dark money,” foreign influence, and disclosure gaps in political spending, most cryptocurrency legislation does not meaningfully address how digital assets may be used to fund political activity. Current federal campaign finance law is built for traditional financial systems. 

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The current federal campaign finance framework dates back to 1971 with enactment of the Federal Election Campaign Act (“FECA”) focused on promoting transparency and preventing corruption by regulating contributions and expenditures in federal elections. While over the decades, FECA has adapted to waves of new innovations such as credit cards, online fundraising platforms, and PAC bundling, such developments remained embedded in the traditional banking system. Digital assets operate outside of many of the financial intermediaries on which FECA’s disclosure and enforcement mechanisms rely. Cryptocurrency transactions such as buying, selling, trading can occur without banks, payment processors, or other intermediaries that traditionally serve as verification points for campaign finance compliance. 

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As a result, the Federal Election Commission (“FEC”) provided only limited guidance on the treatment of digital assets.  The FEC’s primary guidance related to cryptocurrency comes from Advisory Opinion 2014-02, which concluded that political committees may accept contributions in the form of bitcoin. Under the opinion, the FEC would treat bitcoin as “money or anything of value” under FECA and must be reported as an in-kind contribution at its fair market value, subject to federal contribution limits and source prohibitions. 

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In the decade since publishing the Advisory Opinion, however, the FEC has not engaged in rulemaking or issued formal interpretive guidance addressing the growing digital assets industry including stablecoins, tokenized deposits, and digital asset infrastructure.

Traceability & Disclosure Issues

The use of digital assets in federal campaign finances complicates the FEC’s ability to detect contributions, attribute ownership, and investigate potential violations. Cryptocurrency transactions can occur outside of the banking system, payment processors, or other regulated intermediaries that traditionally serve as points of verification on which FECA’s disclosure and enforcement mechanisms depend. Without clear FEC guidance clarifying how digital-asset contributions should be treated and verified, the use of crypto in political spending risks undermining FECA’s prohibition on foreign national participation in U.S. elections. With crypto products historically built to operate outside the financial system, crypto wallets may not inherently be traceable to legal entities; transactions may be pseudonymous; and funds can move across borders instantaneously. These characteristics are especially salient given FECA’s categorical prohibition on foreign national contributions. 

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The rise of cryptocurrency in political spending is no longer speculative as major political action committees have already integrated digital assets into their fundraising. Fairshake, the leading crypto-backed super PAC, which has raised and deployed hundreds of millions of dollars in recent election cycles, began accepting cryptocurrency contributions in 2024. As crypto-aligned political spending continues to scale, the absence of updated FEC rulemaking or formal guidance heightens the risk that digital-asset contributions could outpace the existing disclosure and enforcement framework.

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Furthermore, Congress continues to distinguish between stablecoins, tokenized deposits, and broader crypto products in emerging legislation. These distinctions may also have implications for campaign finance regulation. Stablecoins are designed to behave like dollars while remaining portable across wallets and protocols, making them popular for cross-border payments.

On the other hand, tokenized deposits are typically issued by insured depository institutions and operate within existing bank compliance and supervisory frameworks, making  them more analogous to traditional electronic transfers subject to the KYC, AML, and identity verification requirements. From a campaign finance perspective, these delineations will affect the traceability requirements for donors and donor disclosure requirements.

FEC and the Call to Action

In the absence of clear federal guidance, several states have begun experimenting with their own approaches to regulate cryptocurrency in campaign finance. In California, committees cannot solicit cryptocurrency contributions unless they use a U.S.-based payment processor that uses KYC protocols to collect identifying information (including name, address, occupation, and employer). By contrast, states such as Ohio have generally followed the FEC’s advisory opinion by treating bitcoin as a permissible form of in-kind contribution, without layering on the same explicit KYC-based compliance infrastructure. 

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While Congress has been explicit about which financial regulators should supervise crypto markets, it has not given comparable clarity to the FEC about how FECA should apply to digital-asset political spending. Congress has the opportunity to follow the model of “regulatory allocation” reflected in the CLARITY and GENIUS Acts by directing the FEC to promulgate rules on digital asset contributions. Such rules could establish (i) disclosure and donor verification for digital-asset contributions and spending and (ii) standardized valuation and reporting for stablecoins and other crypto instruments on a defined timeline similar to what was outlined in Advisory Opinion 2014-02.

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