Bit­coin not money, says court rul­ing in vic­tory for back­ers

The Myanmar Times - - International Business -

BIT­COIN, a Florida judge says, is not real money. Iron­i­cally, that could pro­vide a boost to use of the cryp­tocur­rency which has re­mained in the shad­ows of the fi­nan­cial sys­tem.

The July 22 rul­ing by Mi­ami-Dade cir­cuit judge Teresa Pooler means that no spe­cific li­cence is needed to buy and sell bit­coins.

The judge dis­missed a case against Michel Espinoza, who had faced money laun­der­ing and other charges for at­tempt­ing to sell US$1500 worth of bit­coins to an un­der­cover agent who told the de­fen­dant he was go­ing to use the vir­tual money to buy stolen credit card num­bers.

Mr Espinoza's lawyer Rene Palomino said the judge ac­knowl­edged that it was not il­le­gal to sell one's prop­erty and ruled that this did not con­sti­tute run­ning an unau­tho­rised fi­nan­cial ser­vice.

“He was sell­ing his own per­sonal bit­coins,” Mr Palomino said. “This de­ci­sion clears the way for you to do that in the state of the Florida with­out a money-trans­mit­ting li­cence.”

In her rul­ing Ms Pooler said, “This court is un­will­ing to pun­ish a man for sell­ing his prop­erty to an­other, when his ac­tions fall un­der a statute that is so vaguely writ­ten that even le­gal pro­fes­sion­als have difficulty find­ing a singular mean­ing.”

She added that “this court is not an ex­pert in eco­nom­ics”, but that bit­coin “has a long way to go be­fore it is the equiv­a­lent of money”.

Bit­coin, whose ori­gins re­main a mys­tery, is a vir­tual cur­rency that is cre­ated from com­puter code and is not backed by any gov­ern­ment.

Ad­vo­cates say this makes it an ef­fi­cient al­ter­na­tive to tra­di­tional cur­ren­cies be­cause it is not sub­ject to the whims of a state that may de­value its money to cut its debt, for ex­am­ple.

Bit­coins can be ex­changed for goods and ser­vices, pro­vided an­other party is will­ing to ac­cept them, but un­til now they been used mostly for shady trans­ac­tions or to buy il­le­gal goods and ser­vices on the “dark” web.

Bit­coin was launched in 2009 as a bit of soft­ware writ­ten un­der the Ja­panese-sound­ing name Satoshi Nakamoto.

This year Aus­tralian pro­gram­mer Craig Wright claimed to be the au­thor but failed to con­vince the broader bit­coin com­mu­nity.

In some ar­eas of the United States bit­coin is ac­cepted in stores, restau­rants and on­line trans­ac­tions, but it is il­le­gal in some coun­tries, no­tably France and China.

It is gain­ing ground in coun­tries with high in­fla­tion such as Ar­gentina and Venezuela.

But bit­coin val­ues can be volatile. Over the past week its value slumped 20 per­cent in a day, then re­couped most losses, af­ter news that a Hong Kong ex­change had been hacked with some $65 mil­lion worth of bit­coins miss­ing.

Arthur Long, a lawyer spe­cial­is­ing in the sec­tor with the New York firm Gib­son Dunn, said the July court rul­ing is a small vic­tory for the vir­tual cur­rency but that it is not clear if the in­ter­pre­ta­tion will be the same in other US states or at the fed­eral level.

“It may have an ef­fect as some states are try­ing to use ex­ist­ing money trans­mit­ting statutes to reg­u­late cer­tain trans­ac­tions in bit­coin,” Mr Long told AFP.

Charles Evans, pro­fes­sor of fi­nance at Barry Univer­sity, said the rul­ing “ab­so­lutely is go­ing to pro­vide some guid­ance in other courts” and could po­ten­tially be used as a prece­dent in other coun­tries to avoid the stigma as­so­ci­ated with bit­coin use.

Bit­coins can store value and hedge against in­fla­tion, with­out be­ing con­sid­ered a mon­e­tary unit, ac­cord­ing to Evans, who tes­ti­fied as an ex­pert wit­ness in the Florida trial. –

Photo: AFP

Bit­coin, a Florida judge says, is not real money.

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