Bitcoin: The Conflicting Currency
Bitcoins are a new and successful form of virtual currency or digital money. A bitcoin is an electronic item of value that can be used as a medium for exchange of goods and services and even conversion to real currency backed by recognized national governments. Like all new conceptions that break traditional boundaries, bitcoins or virtual currencies are still misunderstood from a legal perspective. Currently, no federal legislation has been created with respect to virtual currencies, and regulatory bodies such as the Internal Revenue Service (“IRS”), the U.S. Department of Treasury and Financial Crime Enforcement Network (“FinCEN”), and the U.S. Securities and Exchange Commission (“SEC”) have all been left to interpret existing law against the new monetary medium. Meanwhile, federal courts have only occasionally ruled on the legal status of bitcoins themselves, but at all times found that the virtual currency should be treated as a form of online money. While the federal court rulings are still in infancy, they may pose complications for certain federal regulatory bodies that wish for the bitcoin currency to be legally treated as property such as the IRS.