![]() Judge Forrest disagreed, opining as follows: “Bitcoins carry value-that is their purpose and function-and act as a medium of exchange. In response to a charge of money laundering, Ulbricht argued that the transactions he engaged in were not ‘financial transactions’ because they were conducted using bitcoin, and bitcoin is not money. Ulbricht created, owned, and operated the website Silk Road, which facilitated the anonymous buying and selling of narcotics using a bitcoin-based payment system. Forrest reached a similar verdict in another case, which involved Ross William Ulbricht. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money ( SEC v. However, it can also be exchanged for conventional currencies, such as the U.S. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. It is clear that Bitcoin can be used as money. Since they are not investments of money, he argued, they are not ‘securities’ as defined by Federal Securities Law, and so they are not regulated by this body of law. In response, Shavers argued that bitcoin is not money and so the BTCST investments do not count as investments of money. ![]() In 2013, the United States Securities and Exchange Commission accused Shavers of defrauding investors out of more than 4.5 million dollars worth of bitcoins. One case concerned Trendon Shavers, who was the founder and operator of Bitcoin Savings and Trust (BTCST), an online investment scheme that solicited investments and paid returns in bitcoin. This, indeed, is the stance that several judges have taken in recent court cases involving bitcoin. Seeing as bitcoin and other virtual currencies resemble standard currencies and forms of money in certain central respects, it may be thought that they should be classified as money or currency despite their not being legal tender. But it is an open question whether the notion of money or currency should be equated with the notion of legal tender, for the purposes of law and regulation. As we noted, bitcoin and other virtual currencies are not legal tender in any jurisdiction. The answer to this question, though, is far from clear. If bitcoin and other virtual currencies are classified as money or currency, then these existing laws and regulations would apply to the users of these virtual currencies. For there are many existing laws and regulations concerning money or currency, such as money laundering laws, banking laws, and tax regulations. The advent of virtual currencies raises a pressing question for lawmakers, regulators, and judges: should bitcoin and other virtual currencies be classified as money or currency for legal and regulatory purposes? As Anita Ramasastry (2014) notes, the answer to this question has significant practical implications. That is, there is no state or other territory in which these currencies are “recognized by law as a means to settle a public or private debt or meet a financial obligation, including tax payments, contracts, and legal fines or damages” ( Investopedia 2021, par. Furthermore, virtual currencies do not have the status of legal tender in any jurisdiction. Rather, they are typically issued and controlled by private individuals or organizations. More importantly, virtual currencies are not issued or controlled by a central bank or other public authority, unlike standard currencies. This distinguishes them from standard currencies, which usually come in both physical and electronic form-for instance, US dollars come in the form of physical banknotes, as well as in electronic form. As their name suggests, they are entirely virtual or digital. But virtual currencies also differ from standard currencies in certain salient respects. Most notably, many of them are used as a method of payment in some environments. ![]() These virtual currencies share some features in common with standard currencies such as the US dollar, the euro, and the yen. Today, there are thousands of such currencies in existence. The launch of bitcoin in 2009 ushered in a new age of ‘virtual currencies’.
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