Five years ago, one bitcoin sold for less than $15. Two years ago, the unit price was about $500. Now, the price of a bitcoin has topped $15,000, and it’s climbing fast enough to garner front-page attention by major newspapers. Since its inception, bitcoin has invoked thoughts of a shadow network where users trade in an untraceable electronic currency for drugs, weapons and other illicit goods and services. That world is not a fantasy, and some bitcoin holders have gone so far as to use bitcoins to hire hitmen, see, e.g., United States v. Ulbricht, 858 F.3d 71 (2d Cir. 2017).
But there’s a mundane side to bitcoin, too. At bottom, virtual “currencies” like bitcoin are assets. According to the Commodities Future Trading Commission, they are also treated as commodities. And like many assets and commodities, bitcoins are subject to regulation. The U.S. Securities and Exchange Commission (SEC) has even begun filing enforcement actions against those who conduct “initial coin offerings” in violation of federal securities laws.
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“Appreciating Bitcoin: A Holiday Guide to Legal Hot Topics in Virtual Currency,” by Ethan M. Simon was published in The Legal Intelligencer on December 20, 2017.