Bitcoin Weekly Recap 7-29-2016
Florida Court Decision: Bitcoin Is Not Money
Many digital currency enthusiasts have been waiting with interest for the results of a criminal case in Miami-Dade County, Florida – or, more specifically, they’ve been waiting to see how the judge in the case would rule on one element of the case having to do with Bitcoin’s status as a new form of money. While most in the cryptocurrency community – and a growing number of people outside that community – recognize Bitcoin and other digital currencies as money, the defense argued that the charges leveled against the defendant were unwarranted due to Bitcoin lacking recognized status as actual money. Judge Teresa Mary Pooler agreed, and dismissed all charges.
For those who haven’t been following the case, it involved an indictment on money-laundering and illegal money transmission charges related to a task force sting operation that took place in 2013. That task force – made up of Secret Service personnel and officers from the Miami Police Department – was looking into Bitcoin trading throughout the area. The defendant was contacted by two members of the task force, who met with him several times and eventually offered to buy Bitcoin from him. They reportedly told him that they were planning to use the digital currency to buy stolen credit card numbers. He sold them $1,500 worth of Bitcoin, and they later arrested him as he was preparing to sell them another $30,000 of the digital currency.
That ultimately led to the state bringing the defendant with the money laundering and money transmission charges. The judge rejected the charge of operating as a money services business, finding that “Bitcoin has a long way to go before it the equivalent of money.” She doubled down on that sentiment while rejecting the money laundering charge, noting that money laundering requires a financial transaction – something that cannot occur if Bitcoin is not actually money.
It should be noted, of course, that this decision is well-aligned with the IRS’ view on Bitcoin and other digital currencies, which holds them to be capital assets rather than money, even as it is at odds with the European Court of Justice’s 2015 ruling that specifically identified digital currencies as money for VAT tax purposes. In any event, this ruling is likely to have limited precedent, given that it applies to the unique circumstances of this one case, and the fact that it is a single state court decision. A similar case with similar results at the federal district or appellate court level would be another matter altogether.
European Commission to Bitcoin Users: We Need to Know Who You Are
The EU’s European Commission wants you to know that it couldn’t care less how you feel about your anonymity. If you’re using Bitcoin, the EU wants to know who you are. While not surprising given some of the Union’s other proposals over the course of the last year, this one will almost certainly come as a real kick in the stomach to cryptocurrency enthusiasts who prefer the relative anonymity that their favorite digital currencies provide. If the Europeans have their way, that anonymity will soon be a thing of the past.
The new proposal comes as the EU continues its efforts to update its AML Directive to include more draconian controls over digital currencies in an effort to fight money laundering and other criminal activities. To make their dream of oversight a reality, the bureaucrats in the European Commission have decided that they need to create a database of all cryptocurrency users. Under the terms of the proposed move, digital currency users would be required to register with the database – using their actual identities – and provide the database with the address or addresses of all of their crypto wallets.
Liberty is so overrated these days...
As Venezuela’s Economy Crumbles, Bitcoin Provides a Lifeline
After more than a decade and a half of its Hugo Chavez-initiated socialist experiment, Venezuela’s economy is in collapse. The country’s industry, infrastructure, and public health care system are all in freefall. Crime is at record highs, shortages of basic goods are widespread, and inflation was recently reported as rising at levels approaching 500% - with some estimates forecasting it to increase by 1,642% in 2017. The IMF is predicting that the nation will experience 21% unemployment next year, which would be comparable to levels seen during the US Great Depression. Private companies are being ordered to forfeit their property and assets as the government tries to salvage whatever it can from the economic wreckage it helped create. Amid all those concerns, Bitcoin has emerged as a safe haven of sorts for those looking to preserve any semblance of wealth.
The government’s confiscation of U.S. Dollars has led many to seek refuge where they can. Bitcoin currency trading in Venezuela has grown as the nation’s citizens move assets into the one currency they know their government cannot yet touch. With Chavez gone and President Nicolas Maduro having declared a state of emergency – a declaration that was renewed for two more months on July 13, 2016 – capital seizures have become routine. Bitcoin has proven to be one of the few real options for citizens trying to preserve their capital assets – an option that is almost certain to continue to grow as the Venezuelan government continues to exert pressure on the country’s U.S. currency black market.
Ah, socialism... thanks for the reminder.
Is Bitcoin Economy Maturing? One Research Paper Says “Yes!”
A recent research paper from economists at the UCL Centre for Blockchain Technologies suggests that there is clear evidence of the Bitcoin economy’s maturation from prototype to one that involves legitimate enterprises. That evolution, the researchers note, began with the prototype stage, grew to what they call the “sin” stage – which was a period of time in which crypto black markets and gambling comprised much of the economic activity, and has now advanced to a state where economic activities are primarily focused in legitimate areas of commerce. You can read the entire paper, The Evolution of the Bitcoin Economy: Extracting and Analyzing the Network of Payment Relationships, here.