What is Bitcoin? If you ask a Bitcoin user, he will call it a form of currency similar to the US dollar or the British Pound Sterling. However, when it comes to the government bureaucracy and the judiciary the answer isn’t that simple. The debate about whether Bitcoin is a currency or a commodity is reignited following the recent judgement in a lawsuit against Michell Espinoza.
Michell Espinoza, who was charged with money laundering and illegal selling of digital currency was cleared of all charges. Florida Judge Teresa Pooler, presiding the case declared that Bitcoin still has a long way to go before it is considered as money. While it turned out to be a good thing for Michell, the digital currency community is finding it hard to digest the judgement.
A recent article on one of the leading business news portal has quoted several people with interests in Bitcoin and other digital currencies criticizing the Judge’s decision.
Three different US government agencies, FinCEN, CFTC, and IRS have designated Bitcoin as a currency, commodity, and an asset respectively. According to Christopher Burniske from ARK Investment Management, Judge Pooler may have made a mistake by not considering Bitcoin as money. He was quoted by the publication saying,
“Just because the Kenyan shilling is not accepted by all merchants doesn’t mean it’s not a currency, and the same applies to bitcoin.”
He calls for the digital currency to be designated as a new asset class as its properties overlap those of multiple asset classes currently in place. His opinion was seconded by Vijay Michalik from Frost and Sullivan who believes that the digital currency perfectly fits the definition of currency. The debate, if considered may mean that Judge Pooler may have decided wrong and let a man who is supposed to be serving a jail sentence walk free.
On the other side of the table, James Lynn, the managing director of Billion Group, a blockchain payments company argues that the digital currency is much closer to a commodity than a currency. He has drawn parallels between Bitcoin and gold by saying both of them are not backed by any government and there is a finite amount that can be mined. The value of both Bitcoin and Gold are dependent on demand.
However, with not many places available for people to directly spend bitcoin, trading as remained as the major use case of the digital currency until now. Those who want to spend their bitcoin holdings are on most part forced to convert it into fiat currency due to lack of widespread adoption. Maybe Judge Pooler considered the current circumstances in addition to expert witness statements to conclude that Bitcoin is not ready to be considered as money.
One has to note that Judge Pooler did not categorically deny that Bitcoin can’t be a currency. She clearly stated that the digital currency still has a long way to go (in terms of adoption) before it can be widely accepted as a currency. Also, the existing laws are too vague and open to interpretation. She may have erred on the side of caution, which is probably a good thing for a judge to do in such circumstances.
Ref: CNBC | Miami Herald | Image: Shutterstock