Ever since it moved into the mainstream Bitcoin has had a bit of an identity crisis.
Mainly because no one is really sure whether it should be considered money or property. The IRS says it’s property for tax purposes, the Commodity Futures Trading Commission says it’s a commodity, and most Bitcoin advocates like to say it’s the world’s most advanced currency.
However, today one Florida judge ruled it was property, strengthening that argument and potentially setting precedent in future Bitcoin-related court cases.
Here are the details: In a case dating back to 2013, a defendant was accused of selling bitcoin to undercover officers for cash that the officers told the defendant was obtained illegally. The defendant was then arrested and charged with two counts of money laundering (because he was under assumption that the cash he was receiving was “dirty”), and one charge of acting as a money transmitter/payment instrument seller.
Judge Teresa Pooler today dismissed both charges, essentially due to her decision that since Bitcoin isn’t money the defendant can’t be charged for illegally transmitting or laundering money.
For the money laundering charges, the law states that it’s illegal for an individual to conduct a “financial transaction” with money that a law enforcement officer says came from an illegal activity. Judge Pooler agreed with the defense that the charge should be dismissed because a financial transaction is defined as involving a “monetary instrument”, which Bitcoin isn’t.
For the money transmitter/payment instrument seller charge, Judge Pooler also agreed with the defense that Bitcoin doesn’t fall under the definition of “payment” instrument, and referenced the IRS’s definition as an example. Judge Pooler conceded by saying that “attempting to fit the sale of Bitcoin into a statutory scheme regarding money services businesses is like fitting a square peg in a round hole”.
While the decision is only on the Florida state circuit court level, it could act as precedent for future similar cases.
The reality is though that the ultimate decision on how to classify Bitcoin will end up in the hands of lawmakers. At some point state and federal lawmakers (and even those in other countries) are going to have to sit down and write a stricter definition of Bitcoin that will remove any ambiguity on whether or not it should be classified as currency or property.