The body tasked with regulated federal elections in the US has announced it plans to regulate political donations made using crypto mining power.
As part of the plans, the Federal Election Commission intends to designate such donations as what it describes as “permissible”.
The move came after a private firm, called Osianetwork LLC, submitted a question earlier this month asking whether or not the profits derived from mining cryptocurrencies could be diverted to a political party in the form of a donation.
In its response, the Federal Election Commission (FEC) said that it would support the move in principle.
However, it did also point out that if the move was to pass all hurdles and become operational it would not necessarily gain what’s known as “volunteer internet activities exception”.
It would “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”, it said.
The moves, which are inspired in part by anti-crypto fraud aims, came alongside a suggestion by a senior official in the Attorney General’s Office that cryptocurrencies need to be more regulated – with the stated aim of ensuring “the rule of law can reach the entire blockchain”.
Rod Rosenstein, Deputy Attorney General under President Donald Trump, was speaking at the Interpol General Assembly when he made the remarks.
According to industry media, Rosenstein called for regulatory bodies to “work together to make clear that the rule of law can reach the entire blockchain”.
Rosenstein made his overall position on cryptocurrency regulation clear, stating that without regulations it was possible for crypto to be “abused by criminals, terrorist financiers or sanctions evaders”.
He did acknowledge that cryptocurrencies have “some legitimate uses”.
“But bad actors are using them to fund crimes and to hide illicit proceeds. For example, Bitcoin was the exclusive method of payment for the WannaCry ransomware attack that spread around the globe, causing billions of dollars in losses”, he said.
“In addition, fraudsters use the lure of coin offerings and the promise of new currencies to bilk unsuspecting investors, promote scams, and engage in market manipulation. The challenges of regulating, seizing, and tracing virtual currencies demand a multinational response.”
Rosenstein also zoomed in on the issue of initial coin offerings, or ICOs, which are often used by companies looking to finance a business move, but which are unfortunately known within the industry for sometimes having more fraudulent purposes.
“The challenges of regulating, seizing, and tracing virtual currencies demand a multinational response. We must work together to make clear that the rule of law can reach the entire blockchain”, he said.
He also pointed out some of the main achievements of the US government in prosecuting those who have allegedly broken the law.
“To that end, last year, prosecutors in the United States announced the indictment of Alexander Vinnick and the virtual currency exchange he allegedly operated. That exchange received more than $4 billion of virtual currency”, he said.