AO 2018-13: Commercial vendor may provide cryptocurrency mining services to benefit political committees
OsiaNetwork LLC may provide services to political committees to permit individuals to use their internet-enabled devices to participate in cryptocurrency mining pools to benefit those committees. Individuals’ participation in the cryptocurrency mining pools would not fall under the internet volunteer services exemption, but would instead result in contributions from the individuals to the committees.
Background
A political committee that contracts with OsiaNetwork would receive computing resources, servers, webpage design and platform function connectivity. These services would allow individuals to provide the committee the processing power of their internet-enabled devices in a cryptocurrency mining pool. OsiaNetwork would track the amount of cryptocurrency rewards generated by the individuals who join the pool. Then, after subtracting its processing fees, OsiaNetwork would transfer the value (in U.S. currency) of the cryptocurrency allocated to each participating political committee.
Analysis
A contribution is anything of value given, loaned or advanced to influence a federal election. Goods or services offered free or at less than the usual charge result in an in-kind contribution; however, the Federal Election Campaign Act and Commission regulations provide that the term “contribution” does not include “the value of services provided without compensation by any individual who volunteers on behalf of a candidate or political committee.” Further, an individual volunteer or group of volunteers may engage in certain election-related internet activities without making a contribution. These “exempted” internet activities include, but are not limited to, sending or forwarding electronic mail, providing a hyperlink to a website, creating, maintaining or hosting a website, paying a nominal fee for the use of a website, and any other form of communication distributed over the internet.
Since individuals joining the cryptocurrency mining pool would be generating the money transferred by OsiaNetwork to the political committees, the Commission found that individuals joining in the cryptocurrency mining pool would be providing “something of value,” or contributions, to the committees. The individuals’ online mining activities would not fall under the volunteer internet exemption since the Commission did not intend for the exemption to be “so broad as to encompass every activity that might make incidental use of the internet.” The cryptocurrency mining pool also did not contain an expressive element that would make it a “form of communication distributed over the internet.”
The Commission concluded that money received by the political committees through OsiaNetwork’s cryptocurrency mining pools would be contributions, attributable to the individuals participating in the pools. OsiaNetwork must use a reasonable method of allocating the contributions proportionally among the individuals who participate in generating the funds. It must transfer contributions from an account segregated from its own treasury funds within 10 days of receipt and must screen contributions to ensure that they do not exceed individual contribution limits or come from prohibited sources.
The Commission concluded that OsiaNetwork would not be making contributions to the committees for providing the services since it is acting as a commercial vendor in the ordinary course of its business and at the usual and normal charge.
Reporting
OsiaNetwork will not be subject to any registration or reporting requirements, including those applicable to political committees, conduits or intermediaries.
Date issued: April 25, 2019; 10 pages
Citations
11 CFR 100.52(a)
Definition of contribution
11 CFR 100.74
Uncompensated services by volunteers
11 CFR 100.94
Uncompensated internet activity by individuals that is not a contribution