US Supreme Court Acknowledges Bitcoin Could Be Used as a Currency

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US Supreme Court Believes Bitcoin Could Be Used as a Currency

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The Supreme Court of the United States issued a ruling today on 21 June 2018 that acknowledges Bitcoin could be used as a currency. While this doesn’t amount to a legal decision on Bitcoin or cryptocurrency, it clearly acknowledges Bitcoin and is the first time Bitcoin is mentioned in a Supreme Court ruling.

The ruling was issued on Wisconsin Central Ltd versus United States, which debated whether stock options can be taxed the same way that cash earnings are. In a dissenting opinion associated with the case, Associate Justice Stephen Breyer said, “Perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency”.

In the case, subsidiaries of the National Railway Company were giving stock options to employees that were being taxed. The company argued that stock options do not count as money remunerations, but repeatedly lost cases in lower courts to get the tax lifted. The Supreme Court has now ruled that stock options don’t count as money remuneration and should not be taxed, overturning previous decisions in lower courts.

Associate Justice Breyer disagreed with this ruling, and his opinion was backed by Justices Ginsburg, Sotomayor, and Kagan. He said, “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.”

The US government is fractured on its stance towards the classification of cryptocurrency. The Internal Revenue Service (IRS) says cryptocurrency is property and, therefore, taxable. The Commodity Futures Trading Commission (CFTC) says cryptocurrency is a commodity and subject to CFTC regulations. The Securities and Exchange Commission (SEC) says most cryptocurrencies are securities and under SEC jurisdiction, although sufficiently decentralized cryptocurrencies like Bitcoin and Ethereum aren’t going to be considered securities.

Now the Supreme Court has issued an opinion which disagrees with the IRS, CFTC, and SEC, saying that Bitcoin and cryptocurrency can be used as a currency, since in the future it could be used for paying employees. Probably unknown to the Supreme Court, many cryptocurrency and blockchain companies already pay employees with Bitcoin, so this is a reality and not an idea reserved for the future.

 

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