Although digital currency was not new, bitcoins have rapidly gained momentum as the most popular form of digital currency in the world.
Its rapid development has left governments scratching their heads as to how to respond, if at all, to the bitcoin movement.
Legal tender is any method of payment recognized by a legal system or government as a valid payment of a financial obligation. Cash, coins, and banknotes are usually recognized as legal tender, whereas checks, credit and debit cards are not; they are merely methods through which the transfer of legal tender is facilitated.
In the United States, the earliest act of Congress regarding acceptable legal tender was the Legal Tender Act of 1862, enacted in the middle of the Civil War, which authorized the federal issuance of paper money and was intended to finance the war without raising taxes.
Over 100 years later, Congress passed another law, the Coinage Act of 1965, that explicitly adopts both paper currency and coinage as legal tender: “United States coins and currency (including Federal Reserve notes and circulating notes of Federal Reserve banks and national banks) are legal tender for all debts, public charges, taxes and dues.
Foreign gold or silver coins are not legal tender for debts.” The Financial Crimes Enforcement Network (“FinCEN”), the division of the U.S. Department of the Treasury responsible for monitoring financial transactions to combat money laundering and other financial crimes, issued a statement in 2013 regarding digital currency, including bitcoins and explicitly exempting transactions involving digital currency from the reporting requirements imposed on users of actual legal tender: “[a] user of virtual currency is not an MSB [money services business] under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations.” (Emphasis in original.)
States are free to issue their own laws regarding acceptable tender for transactions within its borders. In Nevada’s Uniform Commercial Code, NRS 104.1101 et seq., “money” is defined as “a medium of exchange currently authorized or adopted by a domestic or foreign government.” The Code further allows for payment “made by any means or in any manner” unless the seller specifically demands payment in legal tender. Even then, the seller must “give[ ]any extension of time reasonably necessary to procure it.”
There are specific laws regarding what instrumentalities can be used for gambling: “All wagering must be conducted with chips, tokens, wagering instruments or other instrumentalities approved by the [State Gaming Control Board], or with wagering credits or the legal tender of the United States.” To date, the Gaming Control Board has not approved bitcoin as an acceptable gambling instrumentality, but that does not stop hotels and casinos from accepting bitcoins for the non-gambling
goods and services they offer. The D Las Vegas Casino Hotel and Golden Gate Hotel & Casino, for example, announced in January of this year that they would accept bitcoin for certain purchases.
Although bitcoin is not legal tender, it is nonetheless legal currency. For a list of those businesses in Las Vegas that accept bitcoin as payment for their goods and services, visit bitcoinsinvegas.com.
Zachariah B. Parry is a civil litigation attorney and partner at his firm, Pickard Parry. He can be reached at 702-910-4300, through his firm’s website at www. pickardparry.com, or his direct email, email@example.com.