The decision is a welcome pause on the road to financial serfdom. A franker label would be the Banking Anti-Secrecy Act. Individuals must also file reports. In addition, state governments license money transmitters and impose various rules on their licensees.
When most of these rules were enacted, beforethere were basically only three convenient non-barter conduits for making a large-value payment.
He could make the transfer remotely using deposit transfer through the banking system, triggering CTRs or SARs if suspicious. For the time being, the authorities had the field pretty well covered. Now come Bitcoin and other cryptocurrencies. Cash is of course still a face-to-face option. No financial institution is involved in a peer-to-peer bitcoin transfer.
Michell Abner Espinoza Arias and Ponzi went to localbitcoins. Acting undercover, Arias contacted one Michell Espinoza, apparently chosen because his hours were flexible. At that meeting, immediately after the failed purchase, Espinoza was arrested. He was charged with one count of unlawfully operating a money services business without a State of Florida license, and two counts of money laundering under Florida law.
Judge Pooler threw out all three charges. Evaluating her arguments as a monetary economist, I find that some are insightful, while others are beside the point or confused. Gold bars are today not money commonly accepted as a medium of exchange. He received cash only as a seller of Bitcoin.
It is an asset with a floating dollar price, like a share of stock. Of course the Espinoza case is different in that Espinoza did not provide a vehicle for transmitting Bitcoin to a third party, nor did he buy Bitcoin from any third party. On the charge of money laundering, Judge Pooler found that there was no evidence that Espinoza acted with the intent to promote illicit activity or disguise its proceeds.
Further, Florida law is too vague to know whether it applies to Bitcoin transactions. If even casual individual Bitcoin sellers like Espinoza must also register as MSBs, that will spell the end to legal local Bitcoin-for-cash trades.
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