On Friday, May 5, 2017, the legislature of the U.S. state of Florida passed legislation designed to criminalize the use of Bitcoin and other cryptocurrencies in laundering money. The bill, which passed both the Florida House and Senate and now awaits the approval of Governor Rick Scott, adds “virtual currency” to the definition of “monetary instruments” covered under Florida’s Money Laundering Act, which would then be defined as a “medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country.”
The bill was crafted in response to a Florida court case from 2016, in which a criminal case against Floridian Michel Espinoza, who had used Bitcoin to facilitate the online purchase of stolen credit card information, was dismissed after the defense successfully argued that Bitcoin was not a currency under Florida law. The defense likened Bitcoin transactions not to money exchanges, but to “poker chips that people are willing to buy from you” — a trade for something with perceived monetary value, or property.
Circuit Judge Teresa Mary Pooler, in dismissing the case, stated that “this court is unwilling to punish a man for selling his property to another, when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning.”
Cryptocurrency advocates and others concerned about this legislation have warned that this definition of money could lead to other items with solely representative value — “coat checks, tickets to Disney World, and discount coupons” in the words of Barry University economist Charles Evans — eventually defined as money. Like those items, cryptocurrencies are not backed by any government; their value is set by the marketplace. In fact, the IRS classifies Bitcoin and other cryptocurrencies as commodities. However, Bitcoin is often used to facilitate purchases in the same way that a more conventional currency would be, and because of its globally universal value and digital nature, is often used to facilitate illicit transactions such as drug and human trafficking.
Another U.S. state, West Virginia, recently passed similar legislation. The West Virginia law was signed by Governor Jim Justice on April 26, 2017, and will go into law on July 7. That legislation can be found here: http://www.legis.state.wv.us/Bill_Text_HTML/2017_SESSIONS/RS/bills/hb2585%20intr.pdf.
More information about the Florida legislation can be found here: https://www.myfloridahouse.gov/Sections/Bills/billsdetail.aspx?BillId=59472