Conclusion

Across the 10 countries and various experts surveyed, several common themes and trends emerged: As a general rule of thumb, existing laws can and often do apply reasonably to virtual currency donations, even if they did not originally envision some of the unique technical and economic features of virtual currency. Best practices for donors and recipients alike—namely, “document, disclose, or decline”—are useful in the context of most non-cash contributions, whether that be artwork or Bitcoin. In many countries, there is some measure of unspecificity and outright uncertainty about how specific legal requirements overlap with or apply to virtual currencies. The broader policy landscape reflects that we are still in a relatively early phase for virtual currencies and regulators often prefer to monitor closely and take enforcement action selectively. Quantitatively, the volume of virtual currency donations is quite small relative to traditional cash donations.

As a general rule of thumb, existing laws can and often do apply reasonably to virtual currency donations, even if they did not originally envision some of the unique technical and economic features of virtual currency

There are significant benefits on the horizon for accepting or encouraging virtual currency donations: Not only the prospect of more donations, greater speed, or considerable appreciation for those organizations that hold donated virtual currency rather than immediately liquidating—but also the advantage of censorship-resistant donations. For CSOs that operate exclusively in stable, open, and democratically elected countries—or are not as concerned with donor privacy—the difference between accepting Mastercard or Bitcoin, may not appear hugely consequential. However, for CSOs that work in more closed or repressive countries, or who support sometimes controversial causes, like human rights¹ and reproductive freedoms,² being able to accept anonymous or pseudonymous donations and quickly utilize them without being stymied by any given local official can make a world of difference in terms of advocacy, safety, and security for charities and donors alike.

To be sure, there can be downsides to virtual currency donations; particularly, a high compliance burden to track and adhere to multiple legal regimes in any given jurisdiction. Practically speaking, price volatility and technical capacity to safely custody virtual currency loom large. At the moment, some civil society organization leaders may simply feel that the risks and perceived risks of virtual currencies—a donation going awry, coming from an ill-gotten source, being frozen or investigated by a governmental entity, or creating a conflict of interest—outweigh the benefits.

Stepping back, part of what is so remarkable about virtual currencies is how quickly they emerged and catalyzed great interest. Some aspects of these technologies may prove too risky; some may become widely adopted by the private and/or public sectors; a great many may fail as the market coalesces. But the proliferation of virtual currencies, in some form, seems all but inevitable. While securities regulators have stepped up enforcement against the issuance of new ICOs, there is no discernible momentum towards—or reason to start—categorically banning virtual currency at this time, especially in the charitable context. And there is good reason to believe that such bans would be ineffective in stopping this trend over the long- and medium-term.

Instead, charities, policymakers, and the citizenry they serve would be better served by continuing to proactively engage one another and assess where and how the adoption or acceptance of virtual currency can, in fact, advance the public interest. We think there is ample opportunity for additional research and public consultation on these questions. For example:

• Do virtual currencies serve a public need (anonymous payments, quite typical with paper cash) that is otherwise unavailable with traditional currencies, where electronic payments are almost always tied to individual identities?
• Should issuers of traditional currencies, such as governments and central banks, start adopting privacy features into their own digital payment infrastructures?³
• Should policymakers develop regulations for virtual currency custodians and exchanges that more closely adhere to requirements placed on traditional banks, such as asset reserve requirements, deposit assurances, and regular audits of their holdings?⁴
• When law enforcement authorities seize virtual currency assets, should these assets be treated as property and publicly auctioned like boats or houses—or donated to the national treasury like equivalent seizures of cash?⁵
• How should charities evaluate virtual currency custodians—including the risk of an exchange or custodian becoming hacked or otherwise losing the charity’s donations—against other risks that may emerge when charities choose to self-custody funds instead?
• Could regulators, policymakers, and/or researchers play an important role in advising charities on these questions, including through the circulation of more detailed “virtual currency best practices” that include instructions, walkthroughs, and thorough explanations of security measurements and tradeoffs?
• What risks and opportunities do privately-created virtual currencies, like Facebook’s proposed Libra currency, present for local charities or local monetary authorities?

These are just a few examples of novel questions and possibilities presented by modern monetary technologies.

We look forward to key stakeholders continuing to engage one another on these emerging issues and work towards a world in which virtual currencies help charities promote the public good.