Bitcoin, when introduced was compared to any other in-game currency which didn’t hold any value in the real world. But few years down the line, the cryptocurrency proved false notions wrong by becoming one of the most valuable financial assets. Bitcoin works differently from fiat currencies as no government or central bank is responsible for minting and distributing the digital currency. Also, the universal nature of Bitcoin combined with pre-Bitcoin era laws leaves a lot of room for interpreting the cryptocurrency’s status.
This very inconclusive situation might have saved the skin of one defendant charged with money laundering. According to media reports, a federal judge US Magistrate Judge Hugh B. Scott has recommended that the charges against the defendant who was caught by federal agents for trying to sell Bitcoin be dropped. According to Judge Scott, Bitcoin can’t be considered as money at the moment, even though it has the potential to become one in the near future. The cryptocurrency shares a resemblance with commodities, similar to trading cards and other novelty items.
The interpretation of Bitcoin by Judge Scott moots the prosecution’s argument that the defendant was involved in “money” laundering with the intention of distributing drugs. As expected, not everyone is happy with Judge Scott’s recommendation. The report suggests that the US District Judge Charles J Siragusa influenced the defendant’s attorneys to see through the trial instead of appealing the court to drop money laundering charges against the defendant.
The difference in opinion about Bitcoin is brought about by the lack of clear legal status. US Government departments view Bitcoin as a different asset class for the purpose of maximum taxation, which has further led to the confusion. However, a comparison of Bitcoin-related regulations in the United States with that of Japan — a country which recently recognized Bitcoin as a mainstream currency shows major differences.
This is not the first time a Judge has considered Bitcoin as a commodity and not money. The earlier incident involved a federal judge at the Miami-Dade Circuit Court, where Judge Teresa Mary Pooler announced a similar judgment in favor of the defendant who was charged with money laundering and illegal sale of cryptocurrency.
With the defendant in the New York case deciding to go to trial, the outcome will add to existing precedents involving the sale of Bitcoin and money laundering.
Ref: DCE Brief | The Buffalo News | Image: BanBitcoinOnline