No it doesn't. Accepting donations in Bitcoins is no different than accepting cash yen or euro or Zimbabwean dollars. You value them at the market's dollar rate for tax purposes. The other objections are thorough nonsense as far as I can tell.
"We don't want to mislead our donors."
You just did. You took their Bitcoins and did something with them wholly different from what you said you were going to with them. (The EFF says it donated them to the Bitcoin Faucet.) The honest thing, and what your donors expected, would have been to convert them to dollars (or whatever) and spend them as you would any other donation, or to purchase goods and services from the Bitcoin economy to promote your mission.
"People were misconstruing our acceptance of Bitcoins as an endorsement of Bitcoin."
You were endorsing Bitcoin by using it. Just say, "Bitcoin's the Wild West. We're scared to take them." And leave it at that.
The EFF is full of lawyers who, presumably, have studies these parts of law at least a little, even if none of them have specialized in it. What's your justification for calling their concerns "thorough nonsense"?
1) Currencies are not securities, and this is plain in definitions of the Securities Act of 1933 and following;
2) The Stamp Payments Act was enacted at the end of the wildcat banking period to end the circulation of small-denomination (less than one dollar) money by bank issuers. It clearly relates to dollar-denominated coins and notes. Bitcoin is a separate currency and has no physical form and no fixed denominations; regardless, the law applies no more to the use of Bitcoin than to the use of any other currency in the United States, which is not controversial.
3) I already explained the tax situation;
4) How is 'consumer protection' a legal issue related to the currency of denomination of a charitable donation?
5) Bitcoin could certainly abet money laundering, but the anti-money-laundering laws of the United States, in addition to regulating the conduct of financial institutions, apply almost exclusively to those who knowingly engage or intend to engage in transactions involving the proceeds of illegal activity.
Bitcoin raises a couple of interesting questions related to its fundamental electronic form, but the objections given are just nonsense.
They may not think so, but buy accepting it, they are endorsing it.
What they do not want people to take away, though, is an explicit or implicit statement that "we believe in what bitcoin has set out to do, and lend our [moral] support to the effort" and possibly furthermore "we believe this is a legal thing to do and that it is a freedom we will fight to defend." Those statements, explicit or implicit, are a different type of endorsement.
Do you think they're endorsing the Chinese yuan?
There's a difference between passively making a payment technique available and actively promoting it to people. By conflating the two, you're opening yourself up to all sorts of ridiculous claims, like the one above.
If you accept a currency, you are implicitly saying "I agree that this thing you have given me has value."
Can we agree saying this is measurably different from saying, "I would prefer it if you paid me this way."?
OP from way back when was claiming the second thing, not the first thing.
This being said, the EFF's choice is cautious, but sensible. (It's just slightly annoying to see Bitcoin labeled as a "product or service", whereas it's supposed to be a protocol.)
And then people will throw a hissy if you aren't "using" their donation. Maybe their choice of the faucet can be viewed in a different light. They are using the donations to promote and ensure a bright future for bitcoin by spreading the wealth. :)
I can't do the same with Bitcoin, I can't have paper in my wallet, I can't go trade it for real goods right now. There is a lot of fluctuations in the price of Bitcoin, since it is entirely virtual it can easily be attacked and there are no systems in place for me to get my Bitcoin back if there is a fraudulent transaction.
edit: s/pretty sure/guessing
Returning the Bitcoins would neither be complex nor difficult. For every transaction you know the sender address and the recipient address. So just return the money to the sender address: as long as the sender didn't remove his old wallet file this address will be valid.
(The only case where you can't return money to the sender address is if some type of virtual "bank" like MyBitCoin was used. In that case sender address do not correspond to the addresses of the individual users. However, the large majority of users doesn't use those banks, but runs their own clients.)
Not sure how the internal cryptography works, but I think if the information was available, the client would show it.
In addition, even the (typical) sender does not know all of his addresses, as some of those addresses are only internally used by the Bitcoin client.
Still, if you send the money to any of those addresses it will appear in the wallet of the sender.
When is something an alternative currency? Would it be illegal for me to donate apples to the EFF, which they could then sell on the farmers market to pay for their servers? Or would that make apples an alternative currency and hence illegal?
Just saying - BitCoin calls itself a currency, but personally I consider them to simply be a virtual good. I sold some bitcoin I mined, and I expect that is how I should explain my income to the tax inspector. So I will probably even have to pay VAT.
So when is a currency a currency? What is the difference between an apple and a pound note? (Assume the apple never decays).
There's no difference. Currencies are just goods whose primary use is as a means of exchange.
The usually enumerated properties of a currency are (1) a means of exchange, (2) a store of value, and (3) a unit of account.
(2) is really not required; almost all modern and historical currencies fail it to some degree. (1) is the true test, and it amounts simply to being able to find someone willing to exchange what you want for some amount of your would-be currency; (3) follows from (1), since (1) implies agreeing a price in units of your currency.
I'm sorry if you feel that sitting with popcorn and watching this mess and waiting for it to stabilize is worse than being an early adopter.
And when will be the next chance to experience a bubble life (if it is a bubble - or a boom, or whatever)?
I think it makes sense for them to step up and admit that they don't understand the law surrounding bitcoin well enough to be comfortable accepting it. There's no point in assuming an unknown-sized risk just for bitcoin when there's other things in their mission they can work towards.
I'd hate to see the EFF financially decimated merely because they accepted bitcoin donations. They are useful people, let them pick their battles.
They do say "[this laundry list of laws] [are potentially related]" but they're aware of the "three felonies a day" nature of our society. What isn't potentially illegal?
Besides, most of those issues would go away if they simply resold their btc immediately and claimed that as the donation value.
I can see that they don't want to be seen as endorsing the use of Bitcoin specifically, especially storing value in it, but if they immediately resold their btc they'd be using it safely (to avoid a hypothetical btc crash wiping out their funds) and promoting responsible usage of any payment service (storing money in Paypal accounts is a notorious no-no, even though it's denominated in USD).
If I understand correctly, EFF has some legal doubts about Bitcoin as a currency. So they give up and will give back randomly the money. Why not doing the same for the existing currencies? or the current financial system? we may have some doubts but it's not a reason to give away the money.
The donors usually expect the money to be used for their cause. As a EFF donor (in USD and Bitcoin), I would like to be sure that the money is used for the objectives of the non-profit organization.
What makes bitcoin more dangerous than other digital currencies?
(Removed section related to your original comment).