Categorizing Bitcoin: The Ongoing Debate

Bitcoin has proven to be a difficult thing to categorize for both regulators and the courts. Is it money, property or currency? There can be vastly different implications depending on the how these questions are answered, including what laws apply to a Bitcoin transaction or whether the transaction is taxable.

Fox News recently reported on a case in Miami-Dade County where Judge Teresa Mary Pooler didn’t consider bitcoins equal to money. The ruling indicated that because virtual currency was treated as property for federal tax purposes, it didn’t fit the definition of a “payment instrument,” and the specified charges didn’t apply. However, in a 2015 case, a DEA agent who allegedly extorted bitcoins from an individual he was investigating received a sentence of six years for multiple charges that included money laundering. Further, there are regulations in New York requiring companies that hold bitcoins on behalf of customers to follow similar rules required of banks. This suggests New York treats bitcoins more like money than property.

The question of Bitcoin’s category continues to be treated differently depending on jurisdictions. The answer will continuously evolve as more people become aware of bitcoins and their intricacies.

 

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Tom is a senior managing consultant with BKD’s Forensics & Valuation Services team. He has provided fraud investigation, litigation support, computer forensics, data mining and business valuation services. His experience includes managing large forensic accounting, fraud investigation and data mining projects.

Tom Haldiman – who has written posts on BKD Forensics.


One thought on “Categorizing Bitcoin: The Ongoing Debate

  1. avatarbrers

    Any movement or splitting of bitcoins can be a potential issue for investigators, as it can prove extremely difficult, if not impossible to determine what has occurred. Have they been moved from one address owned by the person of interest to another, have they been moved into an exchange or a wallet service or have they been sold? That being said, for large amounts of bitcoins it is easier to obtain plausible deniability of ownership as opposed to full anonymity, for smaller sums either can be obtained with little effort and a bit of knowledge.

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