Defining the legal status of digital currencies has become something of an issue, with contrary rulings coming one of after the other, no sooner has one judge ruled bitcoin is not money, another judge in New York, Judge Alison Nathan, rules that it is money and should be treated as such in the case she is presiding over. This illustrates a clear need for legal ruling, especially in the US, to enable the industry to move forward. A final decision is important to the broader digital currency industry and will be needed for new initiatives to succeed.
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What digital currency actually is, has been an ongoing conversation almost since the day Bitcoin burst onto the scene. In particular, the legal position of digital currencies is not only still unclear, but even varies from country to country. However, in an ongoing case being held in New York, pertaining to a dispute between the now closed Florida based bitcoin exchange Coin.mx and a former staff member, has made a ruling that bitcoin actually constitutes a form of money.
During the course of this case, the need to define bitcoin became essential, and here, Judge Alison Nathan of the Southern District Court of New York made a ruling that because of how it is used, Bitcoin must be considered as money.
In the ruling she noted "Bitcoins are funds within the plain meaning of that term. Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment."
While this ruling does not create statute, it is a helpful move for future recognition and the drive from the industry for digital currencies to be recognized as a form of currency. What is confusing, and likely to cause the debate to heat up even more, is that less than two months ago a Florida judge ruled in a money laundering case that Bitcoin could not be classed as money and therefore money laundering rules did not apply.
While the industry will focus on the more recent adjudication that regards bitcoin as money, this limbo digital currency finds itself in, especially in the important US market, is helpful to no one. Indeed, it is clear that within the US concerted effort needs to put forward to gain some legal consensus for the industry as a whole.