Some would call it fictional Monopoly money. Others, like the IRS, consider it to be property. A federal court in Texas recognized the cryptocurrency as "money." California? It just (arguably) made Bitcoin legal tender, along with other coupons and online credits (such as Amazon coins).
What does this mean? In simplest terms, before Gov. Jerry Brown signed AB 129, it was illegal to do what many were already doing: engaging in commerce with "anything but the lawful money of the United States." Now, corporations won't be violating the law by handing out their own promotional funny money. Bitcoin, meanwhile, escapes another government's scrutiny.
Wait, Bitcoin was Illegal in California?
Though the headlines (and lawmakers) are promoting AB 129 as "legalizing Bitcoin," it's questionable whether the statute, repealed by AB 129, ever actually made Bitcoin illegal. Section 107 of the California Corporations Code, which is repealed by the new law, reads:
"No corporation, flexible purpose corporation, association or individual shall issue or put in circulation, as money, anything but the lawful money of the United States."
Okay, so this definitely applies to promotional credits on websites, like Amazon Coins, eBay Bucks, etc. Heck, one might even argue that gift cards, unless they are redeemable for cash, would've fallen under the statute's purview as well. Basically, every major ecommerce outlet was already ignoring this little statute. As the bill's sponsor, Assemblyman Roger Dickinson (D-Sacramento) told the Los Angeles Times, AB 129 merely legalizes existing practices.
But, technically, it has no impact on Bitcoin whatsoever. The statue, per its terms, only applies to alternative currencies propagated by corporations, individuals, associations, etc. Bitcoin is a decentralized cryptocurrency, which in plain English means that some dude created a mathematic algorithm that exists on its own. By solving increasingly complex equations, computers "mine" new coins from the peer-to-peer system. There is no issuing entity, other than the Internet itself.
Maybe, you might argue that the Internet is an "association," but good luck enforcing a statute against millions of Bitcoin holders and miners worldwide.
Either Way: It's Play Money Time!
Whether or not Section 107 applied to Bitcoin is now moot -- Section 107 no longer exists. For Bitcoin, AB 129 removes that little bit of legal ambiguity, at least on a state level. And for tech companies, this tweak legalizes existing practices, which may mean even more use of rebates or promotional credit in the form of in-house funny money.
For your law firm, maybe this makes you a bit more comfortable taking alternative currencies in lieu of cash, especially Bitcoin, the closest thing to "real" funny money. Then again, there's always the 51 percenter time bomb, just waiting to wreak havoc on the BTC market.
Does your firm take Bitcoin? Tweet us with your experiences @FindLawLP.
- Bitcoin Not Safe From Hackers, Prosecutors or Regulators (FindLaw's Technologist Blog)
- What's Wrong With Bitcoin? Mt. Gox and Everything Else (FindLaw's Technologist Blog)
- Should You Accept Bitcoin for Your Services? (FindLaw's Technologist Blog)