What The Heck Is Bitcoin? The Law Struggles For An Answer
A recent court decision has thrown up even more confusion about the legal status of digital currency. A state judge in Florida dismissed criminal charges against a man accused of selling $2,000 in Bitcoin. An undercover police officer had posed as a buyer, and after making two small transactions, revealed that he (the undercover agent) intended to use the Bitcoin to purchase stolen credit card numbers. The officer then said he wanted to buy $30,000 of Bitcoin. The two met to discuss the transaction, but before it was consummated, police arrested the man. He was charged with running an unlawful money services business, and two counts of money laundering.
‘Virtual’ or ‘digital’ currency, also known as cryptocurrency, defies easy categorization. Is it money? Is it property? Or is it just some lines of computer code? Digital currency clearly has some features in common with money (also known as ‘fiat currency,’ in the lingo): both have a defined value, can be exchanged for other forms of currency, and can be used to buy goods or services. On the other hand, digital currencies are not the legal tender of any government, and often (but not always) are not issued or controlled by any centralized body at all. Bitcoin, the most well-known digital currency, is famously ‘decentralized,’ meaning that there is no company or government that issues it, keeps track of it, or polices it. Plus, you can’t put digital currency in your pocket.
This post was published at Forbes on AUG 26, 2016.