Bitcoin has been deemed a form of “money” covered under the Money Transmitter Act, according to a federal court ruling in late July. The case saw the United States bring up charges against the operator of an underground tumbler for bitcoin. The operator “enabled customers, for a fee, to send bitcoins to designated recipients in a manner which was designed to conceal and obfuscate the source or owner of the bitcoins.”
The court declined to dismiss the charges for running an unlicensed money transmitting business under D.C. law and for laundering money under federal law. The operator was located on the Darknet and was allegedly advertised as a way to mask drug, gun, or other illegal transactions. From 2014 to 2017, it was used to exchange the equivalent of around $311 million.
What’s of note: The ruling, while it will likely have minimal impact on how Bitcoin is treated by the market, does establish parameters on how D.C. regulates cryptocurrency in money transmission. It also brings the D.C. rule in line with how federal and state authorities treat Bitcoin for the purposes of anti-money laundering purposes.
The operator sought to dismiss the illegal money-transmission claims by arguing that Bitcoin isn’t “money” under the Money Transmitter Act and that his platform was not a “money transmitting business” under U.S. code. “Money,” despite no strict definition in the law, “commonly means a medium of exchange, method of payment, or store of value,” Chief Judge Beryl A. Howell wrote for the U.S. District Court for the District of Columbia. “Bitcoin is these things.”
The ruling means that Bitcoin is treated as money only in the. context of the Money Transmitter Act.