On July 24th, 2020, a U.S. federal court of Washington D.C. added the Bitcoin cryptocurrency under the Money Transmitters Act. With this move, Bitcoin becomes the first virtual currency in the U.S. to be deemed as ‘money’ under the U.S. Federal Financial Regulations.
This development is a consequence of declining the dismissal of criminal charges against the operator of an underground Bitcoin trading platform, Mr. Larry Dean, by a D.C. federal court. The court order ruled against Dean and held him in violation of the D.C. law – operating an unlicensed money transmitting business. The charges also included laundering money under the U.S. Federal Law. In the process of this decree, the court recognized Bitcoin as ‘money’ under the Money Transmitters Act.
This is a major update for all Bitcoin trading services in Washington, D.C.; their services can be considered violating the state-federal laws of financial services if they are not licensed under the Money Transmitter Act. Hence, all Bitcoin trading services in Washington D.C. need to get licensed for running their crypto business in the U.S. capital.
This federal development, however, may have a minimal impact on the performance of Bitcoin in the U.S. crypto market. Nonetheless, it establishes new parameters on how federal regulations in the District of Columbia evaluate the use of cryptocurrency in monetary transmissions. It also opens challenges on how federal and state authorities can regulate Bitcoin under anti-money laundering purposes.
The Chief Judge of U.S. District Court for the District of Columbia, Beryl A. Howell, specified how ‘money’ is defined under the Money Transmitters Act as a “medium of exchange or method of payment, or a store of value.” Howell sees Bitcoin fulfilling these criteria and hence adopted it under the D.C. financial services law. Bitcoin is now officially a form of money under the Washington, D.C., Money Transmitters Act. The court also added that Bitcoin should be treated as money in all the contexts of money transmissions and financial service licensing in the District of Columbia.