Bitcoin – Is It Really Money?

Florida court dismisses money-laundering case, saying that bitcoin is not money.

Recently, a Florida judge dismissed a money laundering charge against a man who sold $2,000 worth of bitcoin to an undercover agent. The agent claimed he was using the bitcoin to purchase stolen credit card numbers. The judge held that the digital currency is not money. Therefore, it does not fall within Florida’s money laundering statute. The judge stated that trying to regulate bitcoin using a statutory scheme regulating money is “like fitting a square peg in a round hole.” This leaves the door wide open for the Florida legislature to regulate bitcoin and other virtual currency.

Bitcoin was released in 2009. Since that time, courts and legislatures have struggled to fit it into existing legal framework. There are few laws or regulations specifically governing bitcoin and its price fluctuates widely. One expert witness compared bitcoin to “poker chips that people are willing to buy from you” (this expert was paid in bitcoin to appear as a defense witness). The currency isn’t printed, like the euro or the U.S. dollar. The IRS considers bitcoin to be property, as opposed to currency, so any exchanges are deemed to be bartering exchanges. New York now requires “BitLicenses”. They are needed for any businesses that buy, sell, or process bitcoin in the state. New York institutes a multitude of consumer and fraud protections on the businesses. Most notably, the business will have to maintain records of their customers’ names and addresses. This eliminates the anonymity that made bitcoin so appealing in the first place.

It is not just the US that struggles to define bitcoin. In Australia, bitcoin is double taxed. That is because in the country it is considered to be a commodity, not a currency. There is a 10% tax when consumers purchase the currency. They are taxed again when consumers use the bitcoin to purchase goods. Bitcoin is exempt from value-added tax (VAT) in many European countries, indicating that they do not see it as a good but instead as a legitimate currency. In Switzerland, the city of Zug is allowing citizens to pay for public services using virtual currency.

While the trend certainly seems to be towards treating bitcoin as currency, there is still plenty of uncertainty as to what its future will look like. The Florida case may have set precedent for how the rest of the United States will treat virtual currency. It may also encourage legislators to create more laws regulating bitcoin. Only time will tell.

Be Alert: Join the Oregon Scam Alert Network

The Oregon Department of Justice wants to help you stay alert for consumer issues.

How many emails do you get every day? Here’s an opportunity to sign up for email alerts that will provide value – and protection – for you and your clients. The Oregon Department of Justice has a free email alert, to notify us of emerging scams, fraud and other consumer problems. As they explain, “We will keep you updated about important consumer information to educate and protect your friends, family, coworkers and anyone else before they fall victim to scams and fraud.”

Past alerts have included phone tax collectors, ransomware and counterfeit tickets.

Now… stay safe out there.

Oregon First to Pass RUFADAA – Allowing Legal Access to Your Digital Assets

Oregon becomes the first state to pass RUFADAA: The Revised Uniform Fiduciary Access to Digital Accounts Act.

SYK has been advising our clients, friends and colleagues about managing Digital Assets (your online accounts) for many years, lamenting the fact that the Internet was outrunning the law. We’ve been writing about it, testifying before legislators, speaking at seminars and encouraging everyone to prepare a VAIL – or Virtual Asset Instruction Letter. 

We are happy to report that there is new light on the issue. Oregon has just become the first state in the nation to pass RUFADAA: The Revised Uniform Fiduciary Access to Digital Accounts Act. Oregon Senate Bill 1554 was signed by the Governor yesterday and will become effective January 1, 2017.

This law is important in that while it allows for personal representatives, powers of attorney and trustees to have access to online accounts to perform their fiduciary duties, it also requires everyone to be proactive in affirmatively stating in your trust or estate plan that you grant such authority; otherwise, the online providers’ terms of service agreements will control. And those agreements often give the online provider all of the power, including the power to hit “delete” when they know someone has passed, which could destroy vital financial information or precious memories you had intended to share with those you leave behind.

So dust off that will or trust you prepared so long ago and call your estate planner; it’s time that your estate plan caught up with the Internet.

Attorney Victoria Blachly is a fiduciary litigator who has been working on digital asset legislation for six years, testifying before legislators and presenting at seminars throughout the U.S. The issue became very personal to her when she lost a young niece and saw how invaluable her social media was to the grieving family and friends she left behind. Victoria worked closely with one of SYK’s estate planners, Jeff Cheyne, and one of SYK’s business attorneys, Michael Walker, to pursue legislation that was initially hard fought by very large and well-funded online providers.