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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."
“Government'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.”
Ronald Reagan
I can barter my services for goods or other services. Trade one item for another. So, effectively, then this ruling would seem to imply everything is currency, and thus subject to SEC regulation in the States.
Bitcoin is a currency that can be regulated under American Law
Well, yes. When has the government ever ruled that it lacks the power to regulate something?
The motivation behind Bitcoin wasn't to create a currency that government would choose not to regulate; it was to create one that government could not regulate.
This is BS. You can't convert sex to money after you received it - that's the difference between a service and a currency.
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.
-- Betting on the survival of the media industry is a serious risk. I advise investing elsewhere.
Yup, it fits. Sex is now under regulation of the SEC.
I'm sorry, but no. Any person receiving bitcoins can sell them for dollars. That does not hold true for sex.
To sum up, he took Bitcoins for trading into and out of dollars and returned a huge profit (in dollars). But when measured in Bitcoins he returned a loss, investors could have gotten more by sticking to pure Bitcoins, than any dollar trading minus his commissions. So they complained. Not really a Ponzi scheme, but SEC thinks they can use that law.
This really says more about the dollar than anything else. There are 3 times as many dollars now as in 2000 and at no time has there been any export surplus in any of those years, all of that money has been created against nothing.
SEC's desire to regulate means they're forced to pretend Bitcoin is a currency which really adds legitimacy to Bitcoin as a currency. It's a sort of Streisand effect. They want to discredit it by trying to associate it with 'ponzi' and in the process end up legitimizing it.
From the tippy-top of the bitcoin.org website:
Bitcoin is an innovative payment network and a new kind of money.
Now, IANAL, but I suspect walking into court with an argument that bitcoin isn't a new kind of money when its creators clearly and demonstrably assert that it is a new kind of money is likely to fail pretty hard.
And yes, I'm well aware of the of the distinction between money and currency. Gold bugs, sufferers of Fed derangement syndrome and others spend a lot of time proselytizing about this stuff. The thing is that the SEC and the courts don't, which is why no one has ever succeeded in evading financial laws by attacking the legitimacy of fiat money.
At least not without an army.
Maw! Fire up the karma burner!
Shesh.. Not even close on this..
In this case the judge is saying that even though the investors used BitCoin, the activities of the investment where essentially the same as investing dollars so the argument that BitCoin isn't a currency didn't apply. If it walks like a duck, quacks like a duck, acts like a duck and looks like a duck, it's a DUCK.
So.. Even if you make somebody trade in some kind of voucher to invest in your scheme, if you live in the US and are operating in a way that looks the same as something the SEC regulates, you are subject to the regulations.
So the judge is NOT saying BitCoin is a currency, but that the guy was operating an investment scheme that was illegal and is not shielded from the SEC because he used BitCoins.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
Paid for sex is a service, not a currency. You can't return or convert the sex as an abstract unit of value. It is not a currency.
Was there really anyone who believed that bitcoin was somehow going to exist outside of the ability of any government to regulate it?
That belief reminds me of the "sovereign citizens" who believe that some obscure 19th century district judge's decision puts them outside of the federal and state government's ability to prosecute them for any crimes.
You are welcome on my lawn.
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
The memorandum at http://www.archive.org/download/gov.uscourts.txed.146063/gov.uscourts.txed.146063.23.0.pdf which was signed by the judge, says "Therefore, Bitcoin is a currency or form of money..." ...did we read the same article?
~Knowledge is knowing that a tomato is a fruit, but Wisdom is knowing not to put it in a fruit salad.
Is it really such a huge leap to mark a joule or watt as a form of currency?
Well given the way bitcoins are generated and the whole network is working (Hashcash), bitcoins are in a way backed by the electrical power that went into minting them (computing the necessary hashcash powering the transaction).
It's not exactly the same as a real gold standard: in a currency backed by gold, somewhere in some bank's vault there should be piles of gold ingots corresponding to the value of the circulating money. With bitcoins, you don't have actual piles of batteries containing the kWh corresponding to the circulating bitcoins, but for each bitcoin in circulation and bitcoin transaction, there are corresponding hascash which got computed (and is stored in the bitcoin's equivalent of a bank, i.e.: distributed across all nodes of the network). And you can map Joules or kWh to them.
And the current price of bitcoins tends to oscillate around the price of the energy which went into minting them.
You can see bitcoins as a way to convert electricty into another virtual currency. And given the crazy minting rigs that some bitcoin-nerds are building, this relationships become quite obvious.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
And here I was thinking the Bitcoin fanbois would be falling over themselves declaring how it is a milestone that Bitcoin is officially recognized as a legitimate currency. Instead, they seem to be falling over themselves expressing how scandalous it is that the government dares meddle with their freedom or whatever. Some people seem to be impossible to please. To those people: you cannot have it both ways, guys. Either your currency is an illegitimate shadow currency, and assuming it will keep on gaining in popularity, it will only be a matter of time before it gets outlawed, or your currency is legitimate which means that transactions made with it are subject to the law.
Regardless, I would say that seeing this as a sign of legitimacy would be over-interpreting the verdict. For the purpose of cracking down on ponzi schemes, it doesn't matter whether the currency is USD or beanie babies, as long as harm is done to someone's posessions by deliberately misleading them. Or does "freedom" mean that you're free to blatantly rip off your fellow citizens? If so, how about just giving people the freedom to shoot each other? Oh wait, stand-your-ground.
And yes, tough luck for people who thought they could make an end-run around regulations and taxation by coming up with an "unofficial" new currency.
As long as bitcoin was a fringe phenomenon it could be ignored, but now it's time for it to grow up apparently.
Making Bitcoin subject to SEC regulations is a whole other issue, with additional requirements. The SEC regulates (most*) securities and imposes requirements such as registration and transaction reporting. This is far beyond the sort of regulation applied to money. When was the last time you had to report the serial numbers on all the currency you held?
So, which is it? A currency, subject to income reporting rules? Or a security, under the SEC's authority? IANAL, so I'd really like some enlightened input on what is being decided here.
*Derivatives and commodity contracts are subject to CFTC regulation.
Have gnu, will travel.
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You are not reading the same court opinion that we are.
The court (correctly) ruled that because BTC can be freely exchanged to other currencies, it is currency. (Well, duh.)
The judge also ruled that because the "investment" that was offered involved money, it is a securities note - hence the SEC has jurisdiction.
Future Bernie Madoffs should take notice: BitCoins are not a "get out of jail, free" card.
I would LOVE to see Miss Leading's tittles!!!!