By: Nick Gambino
When a Miami court judge declared Bitcoin is not real money it sent reverberations through the cryptocurrency world. Up until now we’ve been freely buying and selling with bitcoins just assuming it was real, especially in the eyes of the law. By “we” of course I mean the uninformed.
But let’s not get that twisted, it doesn’t mean bitcoin is or isn’t real money but it now lies in an even grayer area. If the ruling in one court of law says it’s not money, then this can be used as a precedent going forward.
All of this because defendant Michel Espinoza was being tried for the illegal transmission and laundering of bitcoins worth $1,500 to undercover agents with the intent to buy stolen credit cards.
In an undercover sting operation set up by Secret Service agents, Espinoza was caught red-handed selling bitcoins at well below market value prices. But therein lies the problem. If money can be sold “below market value” is it money at all? You can’t just go up to someone on the street and sell them a $1 bill for 40 cents and expect that to be a smart business deal.
This was the point being argued by Espinoza’s defense. At one point during the proceedings Frank Andrew Prieto, the defense attorney, held up a U.S. quarter and asked an economist on the stand, “Is bitcoin an actual coin?”
To which the economist replied, “In a sense of a physical piece of base metal? No.”
Yes, it exists in the virtual world but is it legal tender? No authority has ever declared it so and with a varying market value it’s too unwieldy to label “money.”
Judge Teresa Pooler in her ruling said, “With such volatility they have a limited ability to act as a store of value, another important attribute of money.” She goes on to explain, “Even to someone with limited knowledge in the area…Bitcoin has a long way to go before it is the equivalent of money.”
With that she dismissed all charges, “There is unquestionably no evidence that the Defendant did anything wrong, other than sell his Bitcoin to an investigator who wanted to make a case.”
In a mostly unregulated field, Bitcoin has been heading in this direction for quite a while. The IRS itself considers bitcoin not as currency but rather as intangible personal property.
We shall see where this leads us and what this means for the future of bitcoin. Minimally it acts as a precedent for future cases.
So if you are dealing in Bitcoin, remember that’s it not considered “real money” and watch out for them federals because they seem to think it still is.
Do you think Bitcoin should be considered the equivalent of money? Let us know in the comments below or join the conversation on Twitter!
ABOUT THE AUTHOR
Nick Gambino is a regular script writer and tech beat reporter for NewsWatch. He lives in Northern Virginia with his wife and daughter.