Bitcoin: Currency or commodity?

The question of the legal status of crypto currencies is increasingly coming to the fore, especially with regard to possible upcoming state regulations. The case of former Bitcoin entrepreneur Theo Chino posed the question to a New York court: Is Bitcoin to be treated Bitcoin Evolution like a currency or like a commodity? The answer: Unclear.

The BitLicenses, as distributed by the New York State Department of Financial Servives (NYDFS), are a costly affair. Many one-man companies fail to obtain licenses to trade crypto currencies simply because they cannot afford to register with the NYDFS.

New Yorker Theo Chino filed a lawsuit against the NYDFS in 2015 and stopped working as a Bitcoin entrepreneur.

Bitcoin Evolution is a costly affair

Two years after filing court documents for the first time, Bitcoin Evolution China’s lawyer argued at the trial last Tuesday that the so-called BitLicense regulations had put an early end to his client’s career.

The legal dispute was mainly based on two allegations. Chinos‘ lawyer argued on the one hand that the NYFDS had exceeded its powers. The other side argued that Chino had no legal basis for his lawsuit.

What happened then can be seen as characteristic of the current legal limbo, with the discourse about crypto currencies and blockchain. The decision of the court was postponed. Judge Carmen Victoria St. George scheduled the verdict for January 11, 2018.

The plaintiff Theo Chino
For Chino and his lawyer, the decision can be seen as a small victory. The case brings the issue to the public and gives hope to smaller companies affected by the law.

The driving force of his argument is and was that as a „small entrepreneur“ he does not have the necessary monetary resources to go through the comparatively expensive process of obtaining a BitLicense. Not only does it cost $5,000, but it also ends up paying the court costs in addition.

In addition, the prospects for an application are not exactly rosy. The status quo is that only a few BitLicenses have actually been issued, while a much larger number are still in the processing status.

When asked whether Bitcoin was a financial instrument, the lawyer replied, „No, absolutely not. He defined Bitcoin much more as a commodity, relying on a U.S. Commodities Futures Trading Commission definition.

The Defence
On the other side of the charge, however, Jonathan Conley, who represents the NYDFS, has spent a lot of time bypassing this question.

Instead of dealing with Bitcoin’s unclarified legal definition, he argued that Chino had no right to continue his lawsuit because, among other things, he screwed up his BitLicense application.

According to Conley, Chino did not fill out the documents correctly. In many fields, he marked „not applicable“ and „I will not disclose“ with a cross. According to Conley, damages were „purely speculative“. So instead of going into the actual charges and looking at the consequences for individuals, Conley’s focus was on inconsistencies in filling out the form.

These ambiguities, which seem to permeate the entire case, will have eventually led the judge to her decision to postpone the verdict. Until January the US-Americans will have to wait for a decision for the time being. But what is the situation in Germany?