The State of Ohio has effectively banned the use of bitcoin for alcohol sales, becoming the first government in the US to take such explicit action.
The decision reportedly came in response to a local journalist's query to the Ohio Department of Public Safety, after that reporter wrote about the Bitcoin Boulevard US project in Cleveland's Cedar & Lee district.
The query asked if accepting bitcoin could jeopardize local liquor licences in any way. The Department of Public Safety is responsible for issuing liquor licences in the state.
Apparently, the answer is 'yes'.
Money and currency
Cleveland.com reported that Eric Wolf, agent-in-charge with the Ohio Investigative Unit of the Ohio Department of Public Safety, said that "because bitcoin's value fluctuates so much, it is more like a commodity and 'not recognized as legal currency.'"
Ohio's Liquor Control Law under Chapter 4301 expressly mentions 'payment of money' in its rules governing the provision of alcohol. It does not use the word 'currency'. This again raises questions about the exact definition of 'money' versus 'official legal currency'. The state's law is quite specific in the way it defines various forms of alcoholic drinks.
This means using anything other than US dollars to buy alcohol in Ohio is prohibited.
Trying to reach out
Some alcohol-selling members of Bitcoin Boulevard US, which announced its project just last week, had already expressed a desire to communicate with authorities about the project and make their positions clear.
The campaign had already reached out to other relevant regulators. The Ohio Liquor Control legal board sent a 'no stance' reply and the federal Alcohol and Tobacco Trade Bureau (TTB) also reportedly raised no objections.
Bitcoin Boulevard US is due to be America's first such scheme – where a group of merchants in one local area all opt to accept bitcoin.
Organizer Nikhil Chand posted his regrets on reddit yesterday, saying the agencies the campaign contacted had all been "intrigued" by bitcoin and listened to explanations.
"I personally think their conclusion is unfortunate, and is indicative of the type of senseless obstructionism small businesses face from many antiquated and complicated laws and regulations," he wrote.
"But, it makes for an interesting new chapter to the bitcoin story and an interesting topic to present at our launch event. I fear this will set a precedent for other areas of the US as bitcoin continues adoption and so I plan to do whatever I can to keep this issue alive."