Charles Bell is a freelance writer who’s passionate about covering a number of different topics. In addition to writing about the latest technology, Charles has a soft spot for anything related to the Marvel Cinematic Universe. When he’s not researching or writing, you can find him playing Fallout 4 on his PS4.
The debate over whether Bitcoin should be classified as a currency or a commodity (or at worst, a gimmick) has been going on for years, and the world still hasn’t come to a consensus.
Last fall, a great deal of discussion was generated by the fact that the CFTC designated Bitcoin as a commodity, specifically as opposed to currency. The designation means that Bitcoin was seen by a major trading commission as a resource in the same category as oil or precious metals, rather than as a type of money akin to the dollar or euro. It didn’t have any effect on how people could privately use Bitcoin, but it was a fairly major statement against the idea of cryptocurrency being disruptive in our everyday finances.
On the other hand, the European Union made the reverse ruling, determining that Bitcoin was more of a currency. And for its part, Bitcoin seems to have been designed for financial exchange and storage as opposed to investment. One overview of all things Bitcoin defines it specifically as “a global form of digital currency” rather than a resource or a new means of wealth storage. Thus, it was intended to function like money, and that’s the way that most of its strongest advocates still appear to think of it.
As the tug-of-war over Bitcoin’s status continues, a recent ruling by a Florida judge dealt a pretty heavy blow to those who would prefer to see it defined as a currency. In a money-laundering case against an individual dealing in Bitcoin, the judge stated that because it lacks backing from any official government or bank, “Bitcoin has a long way to go before it is the equivalent of money.”
It’s odd that this kind of ruling actually helped a suspected money launderer get a case dismissed without charges—something that may further the reputation of Bitcoin as a haven for criminals. However, the greater impact may be the precedent set with regard to the cryptocurrency’s designation. This is the first noteworthy occasion in the U.S. in which a judge has actually ruled on the issue.
Some experts have questioned the determination made by the Florida judge. The chair of the finance department at a New York City business school stated that it was “clearly wrong” to determine that Bitcoin is not an object with tangible value. It’s also been suggested that state judges, without the direction of a strong and consistent federal position on Bitcoin, simply don’t have the economic expertise to make an appropriately informed ruling in a case like this one. That said, the ruling in Florida has already been made.
We’ll see what kind of impact this has in the future, if any, but a legal case like this can set a precedent that would lead other state judges to uphold the idea that Bitcoin isn’t a form of currency. This may actually give license to those who are interested in using cryptocurrency for shady proceedings (such as would-be money laundering). But it’s a tough development, again, for those who advocate the spread of Bitcoin as an alternative currency.