The Congressional Research Service recently took a close look at Bitcoin, and it discovered a rather unexpected land mine that could bring down the world’s most popular digital currency: the Stamp Payments Act of 1862.
This 152-year-old law forbids any American from issuing a check, note, or token that’s worth less than $1, and Bitcoin — which you can think of as a kind of digital token that can be broken down into tiny values, potentially worth much less than $1 — might just fall into that category, according to a
report (20pg pdf) from the Congressional Research Service, the Library of Congress operation that does research on behalf of lawmakers on Capitol Hill.
Indeed, over the past two years, academics and legal scholars have been
quietly debating (50pg pdf) whether or not the Stamp Act — or other government regulations — could be used to curb Bitcoin’s use. It’s certainly possible, says Darrell Duffie, a finance professor at Stanford University.
“A lot depends on whether the government becomes anxious to move against Bitcoin,” he says. “Whether this is the most appropriate statute under which to control Bitcoin, I’m not so confident.”
Chances are slim that this will actually come into play, but the fact that a 19th century law could affect the crypto currency shows just how far the world of U.S. financial regulation is from the fast-moving revolution that is Bitcoin.
The Stamp Act was written during the dark days of the Civil War, when inflation had pushed the value of the metal in coins above their official denomination. That put a serious pinch on the change supply in the United States, one that began to be filled by companies that issued their own paper versions of dimes and nickels, called “shinplasters.”
The government wanted to take back control of the change game. Its solution: a mailroom-inspired “postage currency” (
not to be confused with postage stamps). But to stamp out competitors, it also introduced
18 U.S.C. §336, the Stamp Payments Act of 1862, which is still in effect. Violators face fines and up to six months in jail.
That could be a problem for businesses — and even individuals — that use Bitcoin. But the government isn’t likely to take any action anytime soon, says Derek Dion, a University of Illinois law student who recently published a paper on Bitcoin regulations in the University of Illinois Journal of Law Technology and Policy. He believes the government will keep doing what it’s been doing, providing a pathway for legitimate Bitcoin businesses to comply with federal laws, while at the same time prosecuting Bitcoin users who use the currency in criminal activity.
“I doubt the government will use anything like the Stamp Payments Act to do this,” he says. “Instead, they will use the common criminal statutes. For example, the existing narcotics, money laundering, and wire fraud statutes.”
If the Stamp Act is really a threat to bitcoin, the nonprofit Bitcoin Foundation, which leads its development and advocacy efforts, is unconcerned. “Could some U.S. Attorney looking to make a splash bring this up? Possibly. But the Foundation is prepared to defend a case like that vigorously.”
source:wired
