A Miami judge just ruled that Bitcoin is not money, and its sale unintentionally for illegal purposes does not constitute money laundering.
In a money laundering case where Florida man Michell Espinoza was accused of laundering money by selling Bitcoin to detectives who implied they were going to use it for illegal activity, presiding judge Teresa Pooler ruled that Bitcoin does not qualify as a financial instrument.
“The definition of “financial transaction is found in § 896.101(2)(d), Fla. Stat. A “financial transaction” is a “transaction… involving one or more monetary instruments, which in any way or degree affects commerce…” If the statute is read to mean that in the transaction, the Defendant must be the party who uses the monetary instruments then the money laundering statute would not apply in this case, because Bitcoins, as previously discussed, are not monetary instruments. [emphasis added]”
A precedent set for Bitcoin seller innocence
Pooler’s ruling, in addition to establishing Bitcoin’s legal status, also facilitated Bitcoin sellers from being targeted for legal repercussions for the potentially illegal actions of their customers.
“Detective Arias did represent to the defendant, in so many words, that he was planning to trade what he was buying from the Defendant (Bitcoin) for stolen credit card numbers. The statute requires that the officer as buyer that what was in this case, legally purchased Bitcoin is being used to conduct or facilitate illegal activity; it does not require any affirmative acknowledgement or action from the seller.
The statute does go on to require that the Defendant charged under this statute undertake the transaction with the intent to promote the carrying on of illegal activity...”
While exchanges that must adhere to AML/KYC regulations still watch where their customers spend Bitcoin, the average Bitcoiner at a meetup can buy and sell with very few restrictions in most cases, no matter the customer’s intentions.
Bitcoin’s legal definition issues have facilitated its growth
As with the internet’s advent, the rise of cryptocurrency has led to delays from world governments in classifying and regulating Bitcoin, and as a result, Bitcoin is largely legal and unregulated around the world.
Most countries with a legal definition for cryptocurrency consider it a currency, while others, like the United States, classify it as a commodity.
Currently in Germany, Bitcoin is not considered as currency and as such is not taxed, leading payroll service Pey to offer a tax-free Bitcoin bonus.
Meanwhile in the United States, estate taxes can result in government claiming the majority of your estate after death, while holding Bitcoin can help avoid this.