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Federal Judge Declares Bitcoin a Currency
tlhIngan writes "An East Texas federal judge has concluded that Bitcoin is a currency that can be regulated under American Law. The conclusion came during the trial of Trendon Shavers, who is accused of running the Bitcoin Savings and Trust (BTCST) as a Ponzi scheme. Shavers had argued that since the transactions were all done in Bitcoins, no money changed hands and thus the SEC has no jurisdiction. The judge found that since Bitcoins may be used to purchase goods and services, and more importantly, can be converted to conventional currencies, it is a form of currency (PDF) and investors wishing to invest in the BTCST provided an investment of money, and thus the SEC may regulate such business."
Personally, I think the definition of currency is unclear. If its not "legal tender", or in other words not officially declared as money accepted for paying taxes (by fiat) , then shouldn't it NOT be considered a currency, in the same way that Gold is not considered a currency (unless it is officially stamped as such by fiat). To be a currency, some official government must declare it as official for paying taxes IMHO. So, for a judge to declare Bitcoin as a currency is ridiculous because, for it to be so, he himself would have to be willing to accept it , and then turn around and pay taxes with it.
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The Judge didnt rule that bitcoin is a Currency, from the PDF:
"Therefore, the Court finds that the BTCST investments meet the definition of investment
contract, and as such, are securities.2
For these reasons, the Court finds that it has subject matter "
It clearly says that it find that BTCST is subject to law. no ruling related to Bitcoins. move along nothing to see here
âoeGovernment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.â -- Ronald Reagan
All of this depends on the government's ability to find the bitcoins, and then provide some kind of evidence that it was exchanged for something. If I transfer funds from my checking to savings accounts, that isn't taxed because no goods or services were exchanged.
The government can try to regulate it, but it'll be as successful as the IRS demanding people pay taxes on their purchases of marijuana. Now yes, they'll pass a law anyway, and yes they'll spend an exorbinant amount of money to prove they can enforce it and then make an example out of a few people in highly-publicized cases, but they won't change things substantially.
This will rapidly evolve into another "war on _________", with innocent people being caught in dragnets while the guilty ones rapidly develop the skills to evade it. It's like big banks -- they were too big to fail, and so they were also too big to jail. The government doesn't take down large organizations, criminal or legal... it goes after the people who are isolated. It goes after the low hanging fruit... and it hopes that scares enough people off to keep them in line.
But business will go on as well as ever... already, people using the Silk Road website within Tor have started switching over to virtual machines that do not store any persistent state information... in the next few weeks, I expect many, if not most, will be. Criminals adapt in a matter of hours or days... law enforcement adapts in a matter of months or years. It's not hard to see who has the upper hand here.
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