For all the discussions had about cryptocurrency, a very basic question often gets ignored: Just what is it that we’re talking about when we talk about crypto? Where does crypto fit in among all the terms the law uses to describe concepts that relate, however closely or loosely, to money? As cryptocurrency use becomes increasingly common in commercial activity, courts have found themselves having to grapple with how to characterize this new form of asset.

Is It ‘Money’ or ‘Funds’?

Since early on in governmental civil and criminal enforcement cases, courts have been comfortable equating crypto with “money” or “funds.” In SEC v. Shavers, 2013 WL 4028182 (E.D. Tex. Aug. 6, 2013), for example, the defendant received Bitcoin for return for shares in his investment venture. He argued that the court lacked subject-matter jurisdiction over the securities claims against him, asserting that what he sold could not have been “securities” because, since he received only Bitcoin from the investors, there had been no “investment of money” as is required for “securities” under the test of SEC v. W.J. Howey & Co., 328 U.S. 293 (1946). The court disagreed and upheld subject-matter jurisdiction, stating: “It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and … used to pay for individual living expenses … . [I]t can also be exchanged for conventional currencies, … . Therefore, Bitcoin is a currency or form of money … .”

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