Bitcoins are a four-year-old unregulated, underground online currency. And soon the FEC may let you donate them to political campaigns. (The Washington Post)

Digital currency called bitcoins can be used to pay for OKCupid subscriptions, WordPress blog features and even sandwiches at some Subway franchises.

Could donations to federal political candidates be next?

The Federal Election Commission debated a proposal Thursday to let candidates and committees accept bitcoins as in-kind contributions, in the same way computer equipment or shares of stock are sometimes given as donations.

The six-member panel appeared to be leaning toward sanctioning them, as long as it can resolve concerns about whether the Internet cash could be used to mask the identities of donors.

“There’s a balancing act here,” Commissioner Matthew Petersen, a Republican appointee, said at the end of an hour-long discussion. “There’s this new technology that no one wants to strangle in its infancy,” but the panel also is “trying to make sure that there are adequate protections so that it couldn’t serve as a vehicle for illegal or prohibited contributions to flood into the system.”

What is a bitcoin?

The FEC is one of the first federal agencies moving to issue guidance on the use of bitcoins, a significant step toward mainstream acceptance of the four-year-old online currency.

The experimental money is increasingly attracting the attention of technology investors and government regulators. The price of bitcoins hit a record high this week, topping $400 per coin — a surge driven in part by the decision last month of a major Chinese Web site to accept the currency.

FEC approval would be “yet more recognition from the federal government that bitcoin is a serious new technology that is here to stay and that people want to use in their everyday lives,” said Jerry Brito, senior research fellow at the Mercatus Center at George Mason University and director of its technology policy program. “Current regulation does not take into account anything like bitcoin, and so regulators are having to figure out how to apply existing rules and laws.”

Created by a still-unknown ­developer in 2009, the bitcoin network allows people to make nearly instantaneous online payments without going through a bank or a third party. The transactions are public, although the parties involved are identified only by their bitcoin addresses.

The freedom of the system has captured the imagination of entrepreneurs such as Cameron and ­Tyler Winklevoss, the investor twins who claim to have scooped up 1 percent of all bitcoins in circulation. But the currency also has garnered an unsavory reputation because of its use in illegal transactions on black-market Web sites.

FEC commissioners stressed Thursday that any political committees that accept bitcoins must be able to collect a contributor’s name and address, as with any other donation.

“Knowing how many ones and zeros are in the chain isn’t really helpful to us or to the public,” said commission Chairman Ellen Weintraub, a Democratic appointee.

The commission took up the issue in response to a request by the Conservative Action Fund, a super PAC financed largely by Alabama businessman Shaun McCutcheon, who is also pursuing a challenge to campaign contribution limits now before the Supreme Court.

Dan Backer, an attorney for the group, said obtaining the names and addresses of bitcoin donors should not be any more difficult than in cases when people donate through prepaid gift cards or credit cards.

“I don’t think it presents any greater potential for fraud, misconduct, misuse or abuse than current mechanisms,” Backer said. “There are probably better ways to track it down than folks showing up with anonymous bags of cash at campaigns.”

Although bitcoins function as cash online, the election commission appeared unlikely to categorize it as money for campaign finance purposes because it is not the currency of any nation. Some bitcoin backers have urged the FEC to allow political committees to accept the currency as either cash or in-kind contributions to avoid getting ahead of other federal agencies in classifying it.

“Bitcoin is a new asset class,” said Marco Santori, chairman of the regulatory affairs committee for the Bitcoin Foundation, a nonprofit trade organization representing bitcoin users and businesses. “It’s a baby in a crib, and we still don’t know what it’s going to grow up to be.”

The FEC also is wrestling with whether a political committee should be able to transfer bitcoins to other PACs or use its bitcoins to purchase goods and services ­directly from merchants. In addition, commissioners raised questions about the volatility of the currency, noting that the value of a bitcoin donation could change drastically between when it is given and when it is converted into dollars.

After requests from its members, the Libertarian Party began accepting bitcoins earlier this year, using a service called BitPay that instantly converts the currency into dollars.

The party has received several thousand dollars worth of bitcoin donations, according to Executive Director Wes Benedict, who said the party would welcome the ability to be able to collect bitcoin contributions directly.

The first congressional hearing on virtual currency is to be held Monday by the Senate Committee on Homeland Security and Governmental Affairs, featuring law enforcement officials, academics and bitcoin entrepreneurs.

One of the most urgent concerns for law enforcement is the challenge in tracking bitcoin users, as well as the role the currency has played in funding illicit transactions online. Last month, the Department of Justice shut down Silk Road, an online drug bazaar, seizing millions of dollars worth of bitcoins in the process.

The value of a bitcoin is determined solely by supply and demand; there is no equivalent to a Federal Reserve. On Wednesday, bitcoins were selling for more than $400 on public exchanges, an all-time high. That marks a huge climb from early October, when the value of bitcoins plunged to about $90 after the Silk Road bust.

The number of bitcoins that can be introduced into the system is capped at 21 million. New bitcoins are introduced through a process called mining, in which users devote computer processing power to helping reconcile the ledger that tracks all bitcoin transactions.