US judge rules bitcoin 'is a currency or form of money'

A judge in Texas has ruled that bitcoin is a currency or form of money.

AccessTimeIconAug 7, 2013 at 12:41 p.m. UTC
Updated Sep 10, 2021 at 11:28 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A judge in Texas has ruled that bitcoin is a currency or form of money, which gives the Securities and Exchange Commission (SEC) the go-ahead to sue Ponzi scheme operator Trendon Shavers.

A document signed by US magistrate judge Amos L. Mazzant details the SEC's case against Shavers, founder and operator of Bitcoin Savings and Trust (BTCST), formerly known as First Pirate Savings & Trust.

Shavers enticed people to invest in BTCST with the promise of 1% interest per day. Some investors suffered losses, totalling 263,104 BTC, which equates to around $25 million, based on current exchange rates.

The SEC asserts Shavers defrauded investors and that the BTCST investments are classed as securities, as defined by Federal Securities Laws. Shavers, however, argues the BTCST investments are not securities because bitcoin is not money, nor is it part of anything regulated by the US authorities.

The court document states: "Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money. … For these reasons, the Court finds that it has subject matter jurisdiction over this matter.

Upon viewing a summary of the ruling, Constance Choi, general counsel at Payward Inc, said that this ruling signals that state courts and regulators are starting to pay attention to bitcoin and beginning to take positions on where it fits within existing legal regimes and asset classes.

"In this case, one judicial authority in Texas appears to have preliminarily classified it as currency or form of money. By labelling it as a 'currency', this Texas court is in direct contradiction of the FinCEN guidance, which expressly stated that virtual currencies like bitcoin are not 'currency', such as legal tender or fiat currencies," she added.

Choi went on to say it is important to note that, if this is a lower court ruling, it has limited power of enforcement and may be overturned by a higher court on appeal.

"Lower court rulings are preliminary findings by one court, which must withstand further scrutiny and often legal challenges in the form of appeals to its validity. And it only informs one state's definition, which will apply only in that one state," she explained.

This ruling indicates that the proper definition and regulation of bitcoin is being seriously considered at the state level. "[This] underscores the need for the industry to educate the public – from users to policymakers – to ensure that when such laws or rulings are made, they are made with full understanding of the technology, including the real benefits and risks, rather than ill-informed perceived ones," Choi concluded.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Read more about