Introduction

In December 2017, the New York Times reported on an unusual act of generosity: A single pseudonymous donor going by the name “Pine” announced that they were an early adopter of Bitcoin, now looking to contribute millions of dollars' worth of Bitcoin to charities. Pine received almost 10,000 applications appealing to various charitable causes and listed the recipients and amounts of their donations in a transparent and timely fashion. By the time they were done, Pine had given over $55 million worth of Bitcoin to approximately 60 different charities.¹

The example of Pine’s charitable Bitcoin giving is emblematic of how Bitcoin and other virtual currencies will impact civil society organizations. On one hand, there is a great opportunity: Charities could attract more resources through tax-benefited donations, they may be able to more easily receive donations with high speed, low transaction costs, easy auditability, and from pseudonymous or anonymous donors. Virtual currencies could allow civil society organizations to develop new models for distributing resources directly and quickly to beneficiaries. At a higher level, the meteoric rise of virtual currencies is also intertwined with matters of public interest such as financial inclusion, censorship resistance, privacy, and decentralization of power. Simultaneously, central banks are increasingly exploring state-created, and potentially more value-stable, forms of virtual currency.

Virtual currencies could allow civil society organizations to develop new models for distributing resources directly and quickly to beneficiaries.

On the other hand, charitable donations of virtual currencies also present challenges: Legally speaking, there are questions about how and whether charities and donors should make, receive, solicit, report, and appraise virtual currency donations. Not all of these questions have clear answers. Multiple bodies of law apply in oft-overlapping ways in each country (and in some instances, within states or provinces). The novelty and complexity of these technologies have led many lawmakers and regulators to take a wait-and-see approach to rulemaking, which further accentuates existing gray areas. More generally, virtual currencies can also raise public policy questions around consumer protection, money laundering, tax evasion, and terrorist financing. In the absence of clear guidance, some jurisdictions—such as Algeria, Egypt, Nepal, and Pakistan—have explicitly banned the use of virtual currencies by private citizens and civil society organizations.² Another challenge virtual currency donations have faced is steep declines in value among swaths of the virtual currency market since 2017, and, in some cases, extreme price volatility and allegations of market manipulation.³

As an overarching approach, we sought to answer a fundamental question: can a civil society organization accept donations in virtual currencies—and, if so, how?

This report assesses core opportunities and obstacles in charitable donations of virtual currencies, and aims to bring charities, would-be virtual currency donors, and policymakers alike up to speed on the emerging trends across a number of different countries surveyed. Just as the laws in many countries surrounding virtual currencies are still evolving, this report and accompanying appendices are offered as a living document. At the same time, we hope this research provides some clarity on accepting virtual currency donations and balancing various regulatory priorities. We view comparative analysis as a first and necessary step in helping regulators revisit, revise, and develop legal and regulatory frameworks that will leverage the strengths of virtual currencies and distributed ledger technology.

As of early 2020, countries worldwide are still in a relatively early phase for virtual currencies—whether it is Bitcoin, alternative forms of tokens, or central bank digital currencies. In the specific context of charities, the legal implications and practical applications are even more nascent. But even at this juncture, we see charities accepting virtual currencies in ways that advance their missions, adhere to best practices, and comply with the law. In many instances, virtual currency donations can be squared with existing laws—be it tax, charitable regulation, or anti-money laundering, or complex combinations thereof. In some areas, charities and donors would benefit from further adaptation or clarification of the law. But under all circumstances, regulators should continue to allow for the reasonable application of law to virtual currency donations and consider the potential benefits they may have on civil society expansion, innovation, and the advancement of the public interest.