The US Supreme Court mentioned bitcoin and cryptocurrency while issuing a ruling on a seemingly unrelated case.
On June 21, the Supreme Court issued its opinion on the case of Wisconsin Central LTD v. United States, which centered around the question of whether worker stock options should be taxed as compensation in the same way as actual money.
The case was previously brought before the Seventh Circuit Court of Appeals, where it was ruled that stock options should be taxed the same as income. In his May 8 opinion, Judge Richard Posner had written, "Sheep may have once been a form of money; now stock is."
This ever-changing view of what qualifies as money was reiterated on Wednesday when the US Supreme Court overruled the circuit court's decision.
"The Court thinks it's clear enough that the term 'money' unambiguously excludes 'stock,'" Justice Gorsuch wrote in the court's ruling decision.
However, Justice Breyer, joined by justices Ginsburg, Sotomayor, and Kagan, stated in the dissenting opinion that what society values as money is constantly changing. He wrote:
"What we view as money has changed over time. Cowrie shells once were such a medium but no longer are, our currency originally included gold coins and bullion, but, after 1934, gold could not be used as a medium of exchange, perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency."
The dissenting justices' opinion that cryptocurrency could one day be treated the same as fiat money aligns with the views expressed by many lower court judges.
In United States v. Faiella, the defendants were accused of running an unlicensed money transmitting business using bitcoin. The defendants argued that their actions did not constitute money laundering because bitcoin did not legally qualify as money. District Judge Jed Rakoff did not agree, writing, "It is clear that Bitcoin can be used as money. It can be used to purchase goods or services ... It can also be exchanged for conventional currencies ..."
In 2014, the case United States v. Ulbricht went to the District Court of Southern New York. In this case, the defendant was accused of using bitcoin and the now defunct Silk Road to traffic drugs and launder money. The defendant in this case provided a similar defense as in the Faiella case, but Judge Katherine Forrest rejected the idea that bitcoin could not be used for laundering, saying:
"There is no doubt that if a narcotics transaction was paid for in cash, which was later exchanged for gold, and then converted back to cash, that would constitute a money laundering transaction … One can money launder using Bitcoin."
Whether a government is only considering cryptocurrency "money" to give itself the power to prosecute malicious actors, or if it truly sees the value in the unregulated currency, is still to be seen. With the rising popularity of bitcoin, criminals will find different ways to scam and steal, and it just may be one of these criminal cases that forces the Supreme Court to directly address how crypto will be treated, regulated, and litigated in the United States.