It might seem like a no-brainer that bitcoin is a type of currency, but legal and governmental entities have yet to agree on that. Whether bitcoin is money or not is the virtual currency's equivalent of the "Is Pluto a planet?" debate. In 2014, former NY Superintendent of Financial Services Benjamin Lawsky became the bane of bitcoin enthusiasts everywhere by famously complaining that bitcoin was "neither fish nor fowl." Confusingly, the IRS deemed in 2014 that bitcoin counted as "property" and not money for taxation purposes. (Investopedia has what may be the world's best U.S. Bitcoin Tax Guide, a must-read if you want to know how to legally declare your bitcoin holdings.)
Now the bitcoin community has scored an important, if seemingly small, victory. In a landmark decision, U.S. District Judge Alison Nathan in Manhattan ruled on Monday that bitcoin was indeed to be treated as money, for the purposes of adjudicating an alleged hacking attack against J.P. Morgan Chase & Co. (JPM) and other financial institutions. Florida businessman Anthony Murgio is accused of having used his now-defunct Coin.mx bitcoin exchange to allow customers to launder funds. Prosecutors have declared Coin.mx to be an illegal money transferring exchange. The defense tried to claim that Murgio was in fact not guilty of illegally transmitting funds, since bitcoin did not really qualify as "funds." Judge Nathan has rubbished this claim. Reuters reported that Nathan said,
Bitcoins are funds within the plain meaning of that term," Nathan wrote. "Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment.
This comes on the heels of a case in July, in which a Florida judge made precisely the opposite ruling in a laundering case--that laundering bitcoin was not actually money laundering because bitcoin was not money.