Is cryptocurrency legally money, is the billion-dollar question almost everybody in the altcoin community is afraid to ask. However, one blockchain platform’s developers asked their lawyers the question and received a terrifying answer.
The international law firm Bird & Bird concludes cryptocurrency is not legally money. Instead, Bird & Bird describes the Pluton (PLU) cryptocurrency as a utility token or a loyalty point.
“In summary, PLU are loyalty points similar to cash-back points from your grocery store, or air-miles when you travel,” Bird & Bird concludes. “In this sense, they qualify as utility tokens in every category.”
Is Cryptocurrency legally money or rewards points?
To clarify, Bird & Bird was responding to a query from its client Plutus Tap & Pay. In detail, Plutus Tap & Pay is a cryptocurrency payment app that offers an Ethereum-based altcoin called the Pluton (PLU).
They designed the Plutons to serve as rewards points for users of Plutus’s digital wallet and debit cards. However, Plutons trade on exchanges like any other cryptocurrency.
Plutus apparently asked Bird & Bird is cryptocurrency legally money after MasterCard pulled the plug on its debit card. MasterCard refuses to support cryptocurrency debit cards because its management does not accept altcoins as money.
Legal opinion could destroy Cryptocurrency as we know it
I think Bird & Bird’s Pluton (PLU) is a ticking time bomb that could destroy cryptocurrency as we know it.
In fact all it will take is for one lazy judge to rule that the decision is law to destroy cryptocurrencies’ value. If higher courts go along with the decision, cryptocurrency could have no legal status. Hence it will be easy for regulators, or central bankers, to ban cryptocurrency.
Significantly, Bird & Bird’s opinion has no legal status. On the other hand, many judges are lazy, but they can read and use Google. Thus a judge anywhere in the world with no idea what cryptocurrency is could latch onto the Pluton (PLU) opinion as a definitive legal document.
Why judges will determine if Cryptocurrency is legally money
Therefore, this decision could become law in any country that accepts the doctrine of common law. Under common law judges’ decisions; or precedents, are legally binding on any matter not specifically mentioned in formal legislation.
Importantly, several of the world’s largest and most important countries accept the common law. For instance, India, the United States, the United Kingdom, Canada, Australia, and most of the former British Empire accept the common law.
Moreover, judges in English-speaking countries often based their rulings on opinions from courts in other English-speaking countries. For instance, an American judge finding no U.S. common law on cryptocurrency could base her decision on a British court’s precedent.
Why not being money could help Cryptocurrency survive
However, not being money could help cryptocurrency survive. To explain, a cryptocurrency classified as “rewards points” could escape regulation by central banks.
Notably, the Reserve Bank of India, India’s central bank admits it banned cryptocurrencies without researching them. However, the legality of that ban is being challenged in India’s courts, TNW reveals.
Thus, Indian courts could soon define what cryptocurrencies are and set a precedent that could apply globally. Interestingly, an easy way for central bankers; or judges, to avoid the whole issue of cryptocurrencies is to declare them “rewards points.”
Can Cryptocurrencies survive as Rewards Points?
However, cryptocurrencies being declared “rewards points” raises many other issues. For instance, what securities or equities laws apply to cryptocurrencies?
Plus, could a cryptocurrency that functions as a rewards point violate investment regulations? Finally, what legal obligations exist between blockchain platforms that issue cryptocurrency and the holders of the cryptocurrency?
The answers to these questions will define cryptocurrency’s legal status. In particular, one judge’s ruling on any of these issues could destroy, or enhance, the value of any cryptocurrency.
Under these circumstances, we need serious legal research into cryptocurrency and court rulings on altcoins. Until the courts answer the question is cryptocurrency legally money, altcoins will be on shaky legal ground.