united-states constitutional-law us-constitution cryptocurrency
How are cryptocurrencies not illegal by the US Constitution?
<p>The United States Constitution, <a href="https://www.archives.gov/founding-docs/constitution-transcript#toc-section-8-" rel="nofollow noreferrer">Article I, Section 8</a> reads in part,</p>

<blockquote>
  <p>The Congress shall have Power To coin Money, regulate the Value thereof, and of foreign Coin.</p>
</blockquote>

<p>From this passage, I understand that only Congress has the power to create and regulate currency (a means of payment and a store of value) in the United States. Congress may also delegate some or all parts of this power, which they have done in favor of the Federal Reserve. By that understanding, any instrument used as a means of payment and a store of value not produced by Congress or under Congressional mandate violates Article I, Section 8 of the Constitution. A recent example of such a violation is the <a href="https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency)" rel="nofollow noreferrer">Liberty Dollar</a>, a privately minted coinage distributed and redeemable within the United States and backed by precious metals.</p>

<p>Given that Congress has been explicitly given the power to coin and regulate the value of money in the United States, how  are cryptocurrencies, such as <a href="https://bitcoin.org/en/" rel="nofollow noreferrer">Bitcoin</a>, <a href="https://www.ethereum.org/" rel="nofollow noreferrer">Ethereum</a>, and <a href="https://www.basis.io/" rel="nofollow noreferrer">Basis</a> created, distributed, and redeemed such that they have not been found unconstitutional?</p>

<p>As a slight tangent, what laws allow for the creation and distribution of cryptocurrencies?</p>

<p>The Constitution only regulates the powers of the government; it doesn't directly say what the people can and can't do.  In particular, it doesn't say directly that nobody <em>except</em> Congress can coin money.  However, it does give the government the power to make laws, which are binding on the population.</p>

<p>So Congress possibly could make a law forbidding cryptocurrencies, or at least regulating them, under the "regulating the value thereof" clause.  However, they haven't done so.</p>

<p>In the case of the Liberty Dollar, there <em>are</em> some specific laws that apply.  They were convicted of violating <a href="https://www.law.cornell.edu/uscode/text/18/485" rel="noreferrer">18 USC 485</a>, which forbids the making of <em>physical</em> gold or silver coins that resemble US or foreign money, and <a href="https://www.law.cornell.edu/uscode/text/18/486" rel="noreferrer">18 USC 486</a>, which forbids creating or passing any <em>physical</em> metal coins as money (as well as other conspiracy charges, aiding and abetting, etc).  None of these laws apply to cryptocurrency because they are not physical metal coins.</p>

<blockquote>
  <p>Given that Congress has been explicitly given the power to coin and regulate the value of money in the United States, how are cryptocurrencies, such as Bitcoin, Ethereum, and Basis created, distributed, and redeemed such that they have not been found unconstitutional?</p>
</blockquote>

<p>The power to regulate includes the power to <em>not</em> regulate.</p>

<blockquote>
  <p>As a slight tangent, what laws allow for the creation and distribution of cryptocurrencies?</p>
</blockquote>

<p>In a free society, "everything is permitted that is not forbidden".  We don't need a law specifically allowing the creation and distribution of cryptocurrencies; it's sufficient that there is no law that forbids it.</p>

<p>One question is whether Bitcoin etc. are money in a legal sense.  They don't attempt to link themselves to any actual currency. It's perfectly legal to trade without actual money.  Commerce is generally done (in the US) in US dollars, partly because everybody else does it, and party because the IRS needs accounting in dollars for tax reporting purposes.</p>

<p>The last I heard, cryptocurrency was not considered to be money in the US.  There may have been different rulings since then (I'd estimate I heard of the earlier ruling something like five years ago).</p>

<p>One can create and trade in valuable items without making them money. People cast and trade in platinum ingots, for example. People trade in stocks which are not physical, although they have value, and dollar value at any given moment.</p>
<p>What makes something &quot;currency&quot; or &quot;money&quot; or &quot;legal tender&quot; is that a creditor is required to accept it in payment of debt. (and the government is required to accept it in payment of taxes.)</p>
<p>If I owe someone a thousand dollars and I offer 10 one hundred dollar bills, my creditor must accept that as payment. But if I offer a crypto currency now valued at, as $1,100.00 my creditor can accept or decline, just as if I offered a used car with a blue book value over $1,000. That is barter, not payment in money.</p>
<p><strong>Addition as of 16Sep 2020:</strong> It should be noted that the above applies only to <em>debts</em>, not to <em>purchases</em>. A US store is free to refuse cash, as some restaurants now do, because there is no pre-existing debt; but if a person owes an existing debt to another, the creditor must (in the US) accept official US money as payment at face value, that is what &quot;legal tender&quot; means.</p>
