HB 1010, known as the Monopoly Act, exempts imitation money, such as novelty items or those used in board games, from falling under government jurisdiction for financial regulation. Under the new interpretation of the law, this has been expanded to include cryptocurrencies.
Obscure law meant for board games also exempts virtual currencies
The Monopoly Act was introduced with the intent of preventing the imitation money, used in board games such as Monopoly, from falling under government scrutiny.
Parker Brothers, the company behind Monopoly, lobbied heavily for the law to pass, as imitation bills from collector's editions of the game began to draw high value on the market.
After one collector was arrested for tax evasion after procuring employment in exchange for these collector's edition Monopoly notes, Parker Brothers feared their value would plummet, sinking sales.
The Monopoly Act was passed and signed into law Aug. 5th of 1974, barely noticed during a time of political turmoil and a mere four days before Richard Nixon became the first American president to resign from office.
The wording of the bill, however, provides an unintended loophole for cryptocurrency:
"No token, bill, virtual currency, or counterfeit money, whose purpose it is to parody legal tender or otherwise serve as a novelty, and where such can be demonstrated beyond a reasonable doubt, shall be subject to taxation, regulation, or licensing by any branch of government, but shall instead enjoy free and unrestricted exchange. (emphasis added)”
On Friday, a federal judge ruled that cryptocurrencies are, by virtue of lack of a physical form and issuing bank, by definition virtual currency and as such current financial regulations do not apply.
No luck for similar regulatory relief in Zimbabwe and Venezuela
While the cryptocurrency field enjoys a period of unregulated economic activity in the United States, for now, those in certain third-world countries have not experienced similar good fortune. Both Zimbabwe and Venezuela have enacted regulations that would treat any token traded as a store of value or used for compensation for goods and services as money, regardless of the object itself.
These laws were put in place in both countries following times of drastic hyperinflation when citizens resorted to trading fake currency and game tokens because they held value better than government-issued money.
UPDATE: In response to this article, US president Donald Trump has denied the legality of unregulated cryptocurrency activity, criticizing Cointelegraph via Twitter: