Ever since its introduction, the so-called “online crypto-currency,” Bitcoin, has been raising eyebrows over whether it is a true currency, a scam, or a game.
According to a recent federal judge ruling, the cyber money is in fact, money.
The decision came as part of a fraud lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Trendon Shavers of Texas. The SEC accused Shavers of committing fraud via a Ponzi scheme involving the controversial Bitcoin. The fraud was no small matter and amounted to millions of dollars in the current Bitcoin market.
For his part, Shavers challenged the authority of the U.S. District Court where the case was being tried; asserting that Bitcoins do not, in fact, meet today’s definition of money. Because of this, said Shavers, Bitcoin could not be the basis of the fraud charge levied against him by the SEC.
Magistrate Judge Amos Maazant of the Eastern District of Texas federal court disagreed, writing in response, in part, that:
Shavers argues that the BTCST investments are not securities because Bitcoin is not money, and is not part of anything regulated by the United States. Shavers also contends that his transactions were all Bitcoin transactions and that no money ever exchanged hands. The SEC argues that the BTCST investments are both investment contracts and notes, and, thus, are securities.
It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.
Judge Maazant characterizes Bitcoin not as a currency, such as the dollar or Euro, but more as a precious metal or other resource.
Jon Matonis, executive director of the advocacy organization, the Bitcoin Foundation, responded to the judge’s finding writing in an email to NBC News that, “The ruling is interesting … because it highlights the fact that Bitcoin is becoming recognized as commodity money in the same way that gold and silver are recognized as money.”
In terms of Bitcoin’s viability, the ruling might cause the currency to experience even broader recognition and acceptance. Matonis points out that Bitcoin might even be considered an accepted from of money by the International Standards Organization under a classification known as ISO 4217, which involves so-called “non-national” commodities that do not require government backing or issuance.
The digital currency is currently accepted as monetary trade worldwide by merchants and individuals in exchange for products and services.
Coldewey, Devin. “Bitcoin is a Currency: Federal Judge Says the Virtual Cash is Real Money“; NBC News Technology; August 8, 2013.