As for donations, it's still good. Instead of having vast amount of cash flow unnoticed as bribes/corruption, now you atleast know that the politician received that amount of money. I don't see how it is worse that normal cash.if one can cap amount of anonymous donations with banks and cash, why not do the same here?
Blockchain payments are tracked, so are bank movements; that's not the problem. The problem with blockchain solutions (well, one of many) is that they're pseudonymous, so authorities have to work to demonstrate that account X is linked to person A. Compare with the regular banking system, where every account must have a real identity attached: from the government's perspective, banks are so much better, and they already work (through Visa/MasterCard/Amex). Governments have absolutely no incentive to accept or push an anonymous digital currency. None whatsoever. The more anonymous a currency is (and this one is a bit more anonymous than blockchains), the worse it looks from the perspective of the state.
I think you misspelled unacceptable. Anonymous donations are a massive source of corruption, which is why they tend to be capped by law (and even then, I'm sure a lot of bad people manage to get around it).
Political money needs total transparency.
(Unless you meant "more acceptable to the general public for average transactions"; in which case I agree, but I suspect it will be the opposite for governments and law enforcement agencies...)