By Benjamin Goad - 11/21/13 02:05 PM EST
The Federal Election Commission (FEC) deadlocked Thursday on a proposal to allow donations involving bitcoin in political campaigns, dealing a significant setback for proponents of emerging virtual currencies.
The six-member body split 3-3 on the proposal, according to an attorney representing a political action committee (PAC) asking for permission to accept bitcoins in the current election cycle.
“They didn’t say no,” said Dan Backer, who filed the request on behalf of the Conservative Action Fund (CAF) PAC. “They decided they’re not ready to say yes.”
Backer said he is optimistic that the practice would ultimately be allowed and said the FEC is likely to draft new regulations in the coming months to allay concerns held by the commission's Democratic members about the potential for anonymity in bitcoin donations.
Backer said the three Republican members of the commission appeared ready to endorse the proposal without additional regulations. He argued that virtual currency is “just another form of in-kind contribution,” already allowed by the commission.
Just weeks ago, the FEC signaled likely approval of the proposal.
“The Commission concludes that CAF may accept bitcoins as in-kind contributions under valuation, reporting, and disbursement procedures, as described below,” the FEC said in an advisory opinion this month.
Advisory opinions require support from a majority of the members.
Bitcoins exist only online but can be used to buy real-world goods and services, and are accepted by a growing number of Internet retailers.
Some campaigns had already begun accepting the currency, particularly libertarians who would prefer a reduced federal government role in the monetary system.