The body of the elections in Canada clarifies the cryptocurrency donations for political use

January 15, 2019 Coin Payment

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The Canadian electoral body has launched consultations on how political parties should manage cryptocurrency donations in view of the general elections scheduled for October. Political parties requested guidance from Elections Canada (EC) on the acceptance of contributions and on the conduct of other bitcoin operations. The EC has now published a draft note that broadly supports that cryptocurrency donations are non-monetary and in-kind contributions.

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& # 39; Cryptocurrency is more like bonds and shares & # 39;

In the draft guidelines published on the Elections Canada website, the autonomous agency states that virtual currencies "have both cash and property traits," but points out that they are not equal to money. He says that a cryptocurrency donation is non-monetary, describing it more as bonds or shares, and therefore is not suitable for a tax receipt. However, it should be received within the conditions and limitations of the Canada Election Act (CEA).

"Like the money, them [cryptocurrencies] it can be used to make purchases from companies that choose to accept them, "reads the note." But unlike money, they can not be placed directly into a bank account. Instead, cryptocurrencies can be sold for traditional currencies that can be entered into a bank account. "This feature, according to Elections Canada, qualifies digital currencies as" a form of & # 39; property & # 39; and falls within the definition of a non-monetary contribution ".

The position reflects that of the United States Federal Electoral Commission. Most Canadian government and control agencies have already taken a position on the fact that cryptocurrencies are not monetary. The Inland Revenue of Canada considers encryption as a commodity, subject to the rules on exchange transactions when used to purchase goods or services.

No to anonymous donations

Elections Canada stated that political entities receiving donations should establish a two-step process to identify contributors of over 20 Canadian dollars ($ 15) and to record transaction information from the blockchain so that contributions can be monitored.

Although this recommendation on paper may seem easy to implement, it is more difficult than it appears because of the anonymity associated with cryptocurrencies. Generally, cryptographic donations are sent and received between digital portfolios using public keys that are then translated into addresses and displayed on the ledger blockchain as a string of letters and numbers.

These addresses are the only data available to the public about who could be the sender and the recipient. To address these challenges, Elections Canada indicated that when a political party receives donations in cryptocurrency, it should keep "a registration of the name and address of the contributor, the transaction number on the blockchain or other public ledger, public addresses used in the transaction, the contribution date, amount and type of cryptocurrency submitted, trade value in Canadian dollars at the time of receipt and deducted transaction fees. "

Furthermore, the political party should report the name of the individual, the address and the amount of the contribution in the financial return, if necessary, in accordance with the rules for non-monetary contributions.

"Failure to follow these procedures could mean that the contribution is considered anonymous for the purpose of the EAA that would require the political entity to pay an amount equal to its commercial value to the General Recipient for Canada", explains the guidelines.

Candidates can not purchase the property using Crypto donated

To meet the objective of transparency of the CEA, candidates and party leaders can not purchase property or services directly with cryptocurrencies. This also applies to political parties registered in terms of electoral expenses. The constituency noted that the cryptocurrencies must be liquidated and the funds deposited in the bank account of the political entity before being used to make purchases.

The draft report also found that when a political entity sells digital money, the transaction translates into a contribution from the buyer only if the purchase price exceeds the fair market value. The contributor must be eligible according to the contribution rules and remain within the limit. But political parties can hold cryptography for "an indefinite period", which will be reported as assets at the end of the fiscal year.

Political parties have until January 21, 2019 to present their opinions and improvements to the draft document.

What do you think of Elections Canada's notes on cryptocurrency donations for political parties? Let us know in the comments section below.

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The body of the elections in Canada clarifies the cryptocurrency donations for political use

& # 39; Cryptocurrency is more like bonds and shares & # 39;

No to anonymous donations

Candidates can not purchase the property using Crypto donated

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