Bitcoins are not money?
Want to avoid being charged with money laundering? All you have to do is trade in Bitcoins – as long as you use them in the United States, according to…
Want to avoid being charged with money laundering? All you have to do is trade in Bitcoins – as long as you use them in the United States, according to a circuit court judge.
In one of the most unusual numismatic-related decisions handed down by a court in recent years it was ruled that Bitcoins are not money. The ruling was made by Miami-based 11th Judicial Circuit of Florida Judge Teresa Pooler in an eight-page opinion in July, the report having been made available through the Miami Herald newspaper. The case from which this decision was reached involves an individual named Michell Abner Espinoza. Espinoza was accused by Miami police of laundering $30,000 involving payments made using Bitcoins. He was found not guilty.
According to Pooler’s ruling, “Nothing in our frame of references allows us to accurately define or describe Bitcoin.”
Pooler’s ruling continues, “Bitcoin may have some attributes in common with what we commonly refer to as money … [It can be] exchanged for items of value,” adding, “With such volatility, [Bitcoins] have a limited ability to act as a store of value, another important attribute of money.”
This decision comes in the wake of the IRS declaring in 2014 that Bitcoins are physical property and as such are liable to be taxed. Any non-monetary item exchanged for another non-money item, be it a good or a service, is liable to be reported on IRS Form No. 1099-B as barter.
According to the IRS website, “Barter exchanges have their own unit of exchange, usually known as barter or trade dollars. Trade dollars or barter dollars are valued in U.S. currency for the purposes of information returns. Trade dollars allow barter to take place between parties when one party may not have a simultaneous need or desire for the goods or services of the other members. Barter exchanges act as the bookkeeper for keeping track of trade dollars that participants accumulate. Earning trade or barter dollars through a barter exchange is considered taxable income, just as if your product or service was sold for cash.”
All virtual currencies are considered to be commodities by the Commodities and Futures Trading Commission. So, why aren’t Bitcoins money?
Should coin collectors consider Bitcoins to be exonumia? Bitcoin provider BTCC Chief Executive Officer Bobby Lee announced that physical Bitcoins composed of titanium were being issued beginning in May. At the time of the launch, Lee said, “our aspirations [are] for a future in which everyone uses Bitcoin.”
According to the BTCC web site, “Mint coins are made for Bitcoin enthusiasts and coin collectors. They can be used as a secure cold wallet to store your Bitcoin investment. Mint coins are also collectibles that have a unique, limited edition design, making them a shrewd choice for discerning numismatists.”
Narita International Airport in Japan began installing Automated Currency Exchange Machines on July 29 through which foreign coins can be exchanged for e-money credits. Chinese yuan, European Union euros, Japanese yen, and U.S. dollars can be exchanged into 12 different electronic money types, including some used by Facebook and Skype, each of these being “a store of value.”
The Bank of Tokyo-Mitsubishi UFJ Ltd. plans to become the first bank anywhere to issue its own digital currency in late 2017 as part of the bank’s “FinTech” financial services technology. What is the difference? Both the proposed Japanese currency units and Bitcoins will exist virtually as well as physically. Incidentally, the Japanese Diet (both the Lower and the Upper Houses) passed legislation in March that officially recognizes digital currencies as legal tender.
Regarding the judge’s comment on volatility limiting the ability of a store of value to act as money, where does this place gold and silver American Eagle bullion coins, legal tender coins whose true value fluctuates as does the spot price of the metal of which each is composed?
This article was originally printed in World Coin News.
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