From securities to currencies: the regulatory consequences of adopting cryptocurrencies as legal tender

ABSTRACT

In 2021, El Salvador designated Bitcoin as legal tender within that country, payable for all debts, public and private. The move is novel in the realm of cryptocurrency regulation, but fits within a time-honoured battle over monetary policy with which every country engages. This piece examines the impacts of legal tender designations in these various areas and maps the current regulatory framework of cryptocurrency transactions, to argue that cryptocurrency’s practical uses are decoupling states from monetary control and developing a transnational legal theory agnostic to concerns such as the legal tender question. It shows how the El Salvador regulation threatens to shift the dominant global economic regime towards a world wherein money may not be governed by states at all. The paper develops this transnational legal theory through mapping the US regulatory framework regarding cryptocurrency and examining the impact of the El Salvador regulation from a US point of view.

KEYWORDS:

• Cryptocurrency
• Bitcoin
• El Salvador
• money
• legal tender

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Asamblea Legislativa (Legislative Assembly of El Salvador), ‘El Salvador, Primer País del Mundo en Reconocer al Bitcoin como Moneda de Curso Legal’ (Asamblea Legislativa, 9 June 2021) <www.asamblea.gob.sv/node/11282>. All websites accessed 12 May 2024.

2 Sergio Gorjón, ‘The Role of Cryptoassets as Legal Tender: The Example of El Salvador’ (2021) 35 Banco de Espana.

3 15 U.S.C. § 78c(a)10 (2018).

4 Jeffrey E Alberts and Bertrand Fry, ‘Is Bitcoin a Security’ (2015) 21 Boston University Journal of Science & Technology Law 1.

5 Ibid, 14.

6 SEC. v W. J. Howey Co., 328 U.S. 293, 66 S. Ct. 1100, 90 L. Ed. 1244 (1946).

7 SEC v SG Ltd., 265 F.3d 42, 46 (1st Cir. 2001) (citing Howey, 328 U.S. 298–9) (finding a digital token, which provided returns for token holders, and which the court found to meet the three-pronged Howey test, to be considered a security under the Exchange Act).

8 The standard is horizontal commonality in the Third, Sixth, and Seventh Circuits. See, eg, Deckebach v La Vida Charters, Inc., 867 F2d 278, 282 (6th Cir. 1989); Stenger v R.H. Love Galleries, Inc., 741 F.2d 144 (7th Cir. 1984); Salcer v Merrill Lynch, Pierce, Fenner & Smith, Inc., 682 F.2d 459, 460 (3d Cir. 1982). The standard is vertical commonality in the Fifth, Eighth, Tenth, and Eleventh Circuits. See, eg, McGill v American Land & Exploration Co., 776 F.2d 923, 925–6 (10th Cir. 1985); Villeneuve v Advanced Business Concepts Corp., 698 F.2d 1121, 1124 (11th Cir. 1983) (en banc); SEC v Continental Commodities Corp., 497 F.2d 516, 521–2 (5th Cir. 1974); SEC v Koscot Interplanetary, Inc., 497 F.2d 473, 478–9 (5th Cir. 1974); Miller v Central Chinchilla Group, Inc., 494 F.2d 414, 418 (8th Cir. 1974). Either vertical or horizontal commonality is acceptable in the Ninth Circuit. See Hocking v Dubois, 839 F.2d 560, 566 (9th Cir. 1988). The First and Fourth Circuits have declined to decide the issue, leaving their district courts split. See Shawn H Crook, ‘What is a Common Enterprise? Horizontal and Vertical Commonality in an Investment Contract Analysis’ (1989) 19 Cumberland Law Review 323. The Second Circuit may favor horizontal commonality. See Revak v SEC Realty Corp., 18 F.3d 81, 87–88 (2d Cir. 1994). For further discussion on U.S. Circuit Court application of the commonality prong, see Jonathan E. Shook, ‘The Common Enterprise Test: Getting Horizontal or Going Vertical in Wals v. Fox Hills Development Corp’ (1994) 30 Tulsa Law Journal 727, note 8.

9 SEC v Glenn W. Turner Enterprises, Inc., 474 F.2d 476 (9th Cir. 1973).

10 See Memorandum & Order at 5–16, United States v Zaslavskiy (E.D.N.Y. 2017), (No. 17-cr-647), 2018 WL 4346336.

11 See generally Brodt v Bache & Co., 595 F.2d 459, 461 (9th Cir. 1978) (rejecting requirement for horizontal commonality amongst other investors and requiring only vertical commonality between investor and promoter to be a security); Mordaunt v Incomco, 686 F.2d 815 (9th Cir. 1982) (citing Brodt to determine discretionary commodities trading accounts were not securities because no common enterprise existed between brokers charging commissions and traders holding accounts).

12 See Thomas Lee Hazen, ‘Virtual or Crypto Currencies and the Securities Laws’ (2018) 38(10) Futures & Derivatives Law Report 1 <http://doi.org/10.2139/ssrn.3257449>.

13 Caitlin Ostroff and Elaine Yu, ‘Cryptocurrency Companies Are Leaving China in “Great Mining Migration”’ (Wall Street Journal, 2021) <www.wsj.com/articles/cryptocurrency-companies-are-leaving-china-in-great-mining-migration-11629624602>.

14 Examining the President’s Working Group on Financial Markets Report on Stablecoins: U.S. Senate Committee on Banking, Housing and Urban Affairs, 117th Cong. (2022) (Testimony of Jean Nellie Liang). <www.banking.senate.gov/imo/media/doc/Liang%20Testimony%202-15-22.pdf>.

15 Satoshi Nakamoto, ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ (2008) 21260 Decentralized Business Review.

16 Reves v Ernst & Young, 494 U.S. 56, 110 S. Ct. 945, 108 L. Ed. 2d 47 (1990). aff’d, 937 F. Supp. 834, (W.D. Ark. 1996). aff’d, 507 U.S. 170, 113 S. Ct. 1163, 122 L. Ed. 2d 525 (1993).

17 Ibid.

18 See 15 U.S.C. §§ 77j, 77aa, (2018).

19 Noa v Key Futures, Inc., 638 F.2d. 77 (9th Cir. 1980).

20 See Alberts and Fry (n 4) 21.

21 Department of the Treasury, Financial Crimes Enforcement Network, ‘FIN-2013-G001, Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies’ (2013).

22 United States v Velastegui, 199 F.3d 590, 593 (2d Cir. 1999). See also United States v Bah, 574 F.3d 106, 112 (2d Cir.2009) (citing H.R. Rep. No. 107-250(I), at 54 (2001) 18 U.S.C. § 1960), prohibiting unlicensed money transmitting businesses, was created ‘to prevent the movement of funds in connection with drug dealing.’ See also S. Rep. No. 101-460, WL 201710 (1990), Congress considered the conversion of ‘street currency into monetary instruments’ by criminal drug sellers.

23 Kevin V Tu and Michael W Meredith, ‘Rethinking Virtual Currency Regulation in the Bitcoin Age’ (2015) 90 Washington Law Review 271. Regarding electronic theft, because access to the private key necessary to send Bitcoin from one wallet to another is the functional equivalent to possession of the Bitcoins in that wallet, a person who gains access to a person’s private key can quite easily transfer the Bitcoins to a wallet they control. While the theft may be detectable, as the public ledger can be used to track subsequent transactions, it will likely not be reversible, so the Bitcoins may functionally be lost forever.

24 Nikolei Kaplanov, ‘Nerdy Money: Bitcoin, the Private Digital Currency, and the Case Against its Regulation’ (2012) 25 Loyola Consumer Law Review 111.

25 Law Library of Congress (US), Global Legal Research Directorate, Regulation of Cryptocurrency Around the World (The Law Library of Congress, Global Legal Research Directorate 2021) <www.loc.gov/item/2021687419/>.

26 Laney Zhang and others, Law Library of Congress (US), Global Legal Research Directorate, Taxation of Cryptocurrency Block Rewards in Selected Jurisdictions (The Law Library of Congress, Global Legal Research Directorate, 2021) <www.loc.gov/item/2021666100/>.

27 Kansas Office of the State Bank Commissioner, MT 2014-01, Regulatory Treatment of Virtual Currencies Under The Kansas Money Transmitter Act (2014).

28 Texas Department of Banking, Supervisory Memorandum—1037 (2014). (revised as Texas Department of Banking, Supervisory Memorandum—1037 (2019) making the same determination interpreting the term ‘country of issuance’ as stated in Texas Financial Code § 151.501(b)(1) (defining currency using identical language as 31 C.F.R. § 1010.100(m)(2022)). In both versions, the Texas Department of Banking interpreted ‘country of issuance’ to exclude cryptocurrencies from the definition of ‘currency’.

29 SEC v Shavers, No. 4:13-cv-416, 2013 (E.D. Tex. Aug. 6, 2013). Shavers and the Texas Department of Banking memorandum (n 28) are not necessarily opposed. Shavers held that ‘Bitcoin is a currency or form of money’ within the Howey test for whether a thing is a ‘security,’ which concerns the authority of the Securities and Exchange Commission. The Department of Banking was concerned with Bitcoin more generally as a ‘currency’ under the Bank Secrets Act, which concerns the scope and manner of anti-money laundering statutes.

30 Commodity Futures Trading Commission v My Big Coin Pay, 334 F. Supp. 3d 492 (D. Mass. 2018).

31 Max I Raskin, ‘Realm of the Coin: Bitcoin and Civil Procedure’ (2014) 20 Fordham Journal of Corporate & Financial Law 969.

32 United States v 50.44 BITCOINS, Civil Action No. ELH-15-3692 (D. Md. May 31, 2016). In ‘Silk Road’ case see, Ulbricht, Second Post-Complaint Protective Order, No. 13 Civ. 6919 (JPO), ECF (2013).

33 Shaffer v Heitner, 433 U.S. 186, 216–7. 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977).

34 7 U.S.C. § 2(a)(1)(A).

35 For ‘common usage’ see Mitchell Prentis, ‘Digital Metal: Regulating Bitcoin as a Commodity’ (2015) 66 Case Western Reserve Law Review 609. For ‘a type of monetary exchange’ see Ibid, 628–9. For ‘store of value’ see Jeff Currie, ‘Bullion Bests bitcoin, Not Bitcoin’ (2014) Goldman Sachs Global Investment Research.

36 Press Release, Commodity Futures Trading Commission, CFTC Launches Virtual Currency Resource Web Page (Dec. 15, 2017) <www.cftc.gov/PressRoom/PressReleases/7665-17>.

37 Proposed Interpretation on Retail Commodity Transactions Involving Virtual Currency, 82 Fed. Reg. 60,335 (Dec. 20, 2017).

38 Michael Larkin, ‘SEC Looks at This When Deciding if a Cryptocurrency Will Be Regulated’ (Investors, 14 June 2018) <www.investors.com/news/sec-explains-cryptocurrency-security-asset-ico-regulation/>, (quoting William Hinman, head of the SEC's division of corporate finance).

39 31 U.S.C. § 310.

40 TREASURY ORDER 180-01, 67 Fed. Reg. 64,697 (October 21, 2002). See purpose and rationale, 31 U.S.C. §§ 5311–5314. For monetary instruments and money transmitting businesses, see 31 §§ U.S.C. 5316–5330. For coins and currency receipts, see 31 § U.S.C. 5331. For cash smuggling, see 31 § U.S.C. 5332. For records retention requirements, see 12 U.S.C. § 1829b. For laundering of instruments, see 18 U.S.C. § 1956. For crime of money laundering, see 18 U.S.C. § 1957.

41 31 U.S.C. § 5318A.

42 FBME Bank Ltd. v Lew, 125 F. Supp. 3d 109, 113 (D.D.C. 2015).

43 FBME Bank Ltd. v Lew. See generally Commonwealth Secretariat, ‘Model Provisions on Money Laundering, Terrorist Financing, Preventive Measures and Proceeds of Crime’ (2016). Regarding terrorism financing, see G.A. Res. 54/109 (25 February 2000), <https://treaties.un.org/doc/source/docs/A_RES_54_109-E.pdf>. Regarding firearms and human trafficking, see G.A. Res. 55/25 (15 November 2000) <https://treaties.un.org/doc/Treaties/2000/11/20001115%2011-11%20AM/Ch_XVIII_12p.pdf>.

44 31 U.S.C. § 5318A (c)(2)(B).

45 United States v Ulbricht, 31 F. Supp. 3d 540 (S.D.N.Y. 2014). Particularly interesting in this trial of the developer who created the website The Silk Road as a place for criminal transactions to be conducted pseudo-anonymously with payment in Bitcoin is the court’s openness to the idea that a software developer may have, by creating a website to facilitate illegal activity, engaged in a criminal conspiracy with those others who used the website, even if they did not communicate or coordinate directly with each other. It may be for the best then, that ‘Satoshi Nakamoto’ is unknown as the court claimed that regarding creating software that facilitates criminal activity: ‘Automation is effected through a human design; here, Ulbricht is alleged to have been the designer of Silk Road, and as a matter of law, that is sufficient.’ Though, it would be up to the courts to determine if simply downloading the software to run and exchange Bitcoin, in the absence of any software agreements, would constitute knowing entrance into a conspiracy. See United States v Lorenzo, 534 F.3d 153, 161 (2d Cir. 2008). For more on the concept of cryptocurrency transactions as a facilitator for criminality, see Claire Nolasco Braaten and Michael S Vaughn, ‘Convenience Theory of Cryptocurrency Crime: A Content Analysis of US Federal Court Decisions’ (2021) 42(8) Deviant Behavior 958.

46 Department of the Treasury (n 21) quoting 31 C.F.R. § 1010.100(m) (2012).

47 News Release, Internal Revenue Service, IRS Virtual Currency Guidance: Virtual Currency is Treated as Property for U.S. Federal Tax Purposes; General Rules for Property Transactions Apply. IR-2014-36 (Mar. 25, 2014).

48 Internal Revenue Service Notice 2014–21, 2014–16 I.R.B. 938 (April 14, 2014).

49 26 U.S.C. § 1001(a) ‘The gain from the sale or other disposition of property shall be the excess of the amount realized therefrom over the adjusted basis provided in section 1011 for determining gain, and the loss shall be the excess of the adjusted basis provided in such section for determining loss over the amount realized.’

50 Internal Revenue Service (n 47) 4. See also, IRS Publication 525, Taxable and Nontaxable Income, under miscellaneous income from exchanges of property or services.

51 Internal Revenue Service (n 47) 3. See 26 U.S.C. § 1221 for a definition of capital assets and exclusions from the definition. For cryptocurrency holdings held by an individual for a non-business reason, gains or losses incurred between acquisition and disposition will likely be treated as capital gains.

52 Eli Cole, ‘Cryptocurrency and the 1031 Like Kind Exchange’ (2019) 10 Hastings Science & Technology Law Journal 75; see Act effective Dec. 31, 2017, Pub. L. No. 115-97, 131 Stat. 2054.

53 United States v Euge, 444 U.S. 707, 100 S. Ct. 874, 63 L. Ed. 2d 141 (1980).

54 Zietzke v United States, 426 F. Supp. 3d 758 (W.D. Wash. 2019).

55 Ibid, Dkt. No. 12, 16.

56 United States’ Memorandum in Support of Ex Parte Petition for Leave to Serve John Doe Summons at 7, In re Tax Liabs. Of Doe, No. 3:16-cv-06658-JSC, 2016 U.S. Dist. LEXIS 184200 (N.D. Cal. Nov. 30, 2016).

57 Austin Elliott, ‘Collection of Cryptocurrency Customer-Information: Tax Enforcement Mechanism or Invasion of Privacy’ (2017) 16 Duke Law & Technology Review 1.

58 David H McGill, Benjamin J Sauter, and Beau D Barnes, ‘Cryptocurrency is Borderless—But Still Within the Grip of US Regulators’ (2018) 31(1) International Law Practicum 11.

59 Michael Klein, ‘IRS Expands Use of Legal Tools Against Tax Evaders’ (Cayman Compass, 2015) <www.caymancompass.com/2015/05/08/irs-expands-use-of-legal-tools-against-tax-evaders/>. Many of these enforcement actions were charged as conspiracy to defraud the Internal Revenue Service, see eg, United States v Klein, 247 F.2d 908 (2d Cir. 1957).

60 Eisner v Macomber, 252 U.S. 189, 40 S. Ct. 189, 64 L. Ed. 521 (1920). For a more in-depth discussion of apportionment in relation to direct taxes and the various ways in which this requirement has been and continues to be interpreted to fit prevailing needs, see CH Johnson, ‘Apportionment of Direct Taxes: The Foul-Up in the Core of the Constitution’ (1998) 7 William & Mary Bill of Rights Journal 1.

61 Leidel v Coinbase, Inc., No. 17-12728, Non-Argument Calendar (11th Cir. Apr. 23, 2018).

62 Simon Geiregat. ‘Cryptocurrencies are (Smart) Contracts’ (2018) 34(5) Computer Law & Security Review 1144.

63 Jakub J Szczerbowski, ‘Place of Smart Contracts in Civil Law. A Few Comments on Form and Interpretation’ (2017) Proceedings of the 12th Annual International Scientific Conference New Trends.

64 Ibid, 6.

65 David Houck, ‘Bitcoin: Reacting to Money with Non-Money Attributes’ (2016) 1 Georgetown Law Technology Review 371.

66 Tu and Meredith (n 23) 331.

67 Ibid, 332.

68 See N.Y. Fin. Serv. Law § 200 (McKinney 2022).

69 For a look at possible legal issues around anti-trust as a method for redress by cryptocurrency users during a hard-fork, see Chelsea D. Button, ‘The Forking Phenomenon and the Future of Cryptocurrency in the Law’ (2019) 19 University of Illinois Chicago Review of Intellectual Property Law 1.

70 Peder Østbye, ‘The Case for a 21 Million Bitcoin Conspiracy’ (2018) 3136044 Social Science Research Network 4.

71 15 U.S.C. 15 (a) states ‘any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.’ See Illinois Brick Co. v Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977) (holding that in antitrust cases harm must be direct for a plaintiff to have standing).

72 Konstantinos Stylianou, ‘What Can the First Blockchain Antitrust Case Teach Us About the Crypto-Economy’ (Harvard Journal of Law & Technology Digest, 2019) <https://jolt.law.harvard.edu/digest/what-can-the-first-blockchain-antitrust-case-teach-us-about-the-crypto-economy>.

73 United American Corp. v Bitmain, Inc., 530 F. Supp. 3d 1241 (S.D. Fla. 2021).

74 Christian Catalini and Catherine Tucker, ‘Antitrust and Costless Verification: An Optimistic and a Pessimistic View of the Implications of Blockchain Technology’ (2018) Social Science Research Network Electronic Journal.

75 For a discussion on the ways in which blockchain technologies appear to inherently solve antitrust issues, see Thibault Schrepel, ‘Is Blockchain the Death of Antitrust Law? The Blockchain Antitrust Paradox’ (Social Science Research Network Electronic Journal, 2018) <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3193576>.

76 Ethan D Jeans, ‘Funny Money or the Fall of Fiat: Bitcoin and Forward-Facing Virtual Currency Regulation’ (2015) 13 Colorado Technology Law Journal 99.

77 Henry Black, ‘Legal Tender’ in Bryan Garner (ed), Black’s Law Dictionary (West Group, 9th edn 2009).

78 United States v Faiella, 39 F. Supp. 3d 544 (S.D.N.Y. 2014).

79 Internal Revenue Service (n 47) 1.

80 Legislative Assembly of El Salvador (n 1).

81 U.S. Department of the Treasury, Legal Tender Status <www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx> accessed 4 January 2011.

82 U.S. Const. art. I, § 10, cl. 1.

83 31 U.S.C. § 5103.

84 Dror Goldberg, ‘Legal Tender’ (2009) 6 Bar-Ilan University, Department of Economics, Ramat-Gan Working Paper <https://ssrn.com/abstract=1292893>.

85 Ibid, 4.

86 For a look at the evolving nature of legal tender within the United States and the various historical forces that affected changes in the acceptable forms of U.S. legal tender, see Kenneth W Dam, ‘The Legal Tender Cases’ (1981) The Supreme Court Review 367 <www.journals.uchicago.edu/doi/pdf/10.1086/scr.1981.3109538>. In that discussion, the legal tender cases are Hepburn v Griswold, 75 U.S. 603, 8 Wall. 603, 19 L. Ed. 513, 1868 U.S. L.E.X.I.S. 1136 (1870). (Holding that the United States can coin money, but not that it could deal in paper money), Knox v Lee, 79 U.S. 457, 12 Wall. 457, 20 L. Ed. 287, 1870 U.S. L.E.X.I.S. 1220 (1871). (Holding that the United States could make paper money legal tender for use to pay a government debt), and Juilliard v Greenman, 110 U.S. 421, 4 S. Ct. 122, 28 L. Ed. 204 (1884). (Upholding using government paper ‘greenbacks’ for payment, and articulating a much more expansive view of the government’s latitude in making legal tender decisions, concluding that legal tender was ‘a political question, to be determined by Congress when the question of exigency arises’).

87 Christine Desan, ‘Making the Market’ in Making Money: Coin, Currency, and the Coming of Capitalism (Oxford University Press, 2014).

88 David Graeber, Debt: The First 5000 Years (Melville House, 2012).

89 Jack Parkin, ‘The Senatorial Governance of Bitcoin: Making (De)Centralized Money’ (2019) 48(4) Economy and Society 463. Nakamoto (n 15).

90 Christine Desan, ‘Recognizing the Fiat Reality of Money’ in Making Money: Coin, Currency, and the Coming of Capitalism (Oxford Univeristy Press, 2014). Kostakis Vasilis and Chris Giotitsas, ‘The (A)Political Economy of Bitcoin’ (2014) 12(2) tripleC: Communication, Capitalism & Critique 431.

91 See discussion Section III.A.1.

92 Veazie Bank v Fenno, 75 U.S. 533, 8 Wall. 533, 19 L. Ed. 482, 19 S. Ct. 482 (1869) (holding that a federal tax of 10 percent levied on new state bank notes was not a direct tax, not subject to apportionment for constitutionality, and was constitutional).

93 Ibid.

94 Juilliard, 110 U.S. 421.

95 See Dam (n 86) 382–90 for discussion regarding the evolution of the legal understanding of constitutionally acceptable deviations from the Framers’ likely intent that paper currency could not be constitutionally issued by the federal government and the way in which the unprecedented monetary situation of the Civil War lead development of a new currency regime under the Necessary and Proper clause.

96 31 U.S.C. § 5103.

97 This assumption that there is ready exchange between U.S dollars and other forms of payments may, ironically, be used to detract from the use of Bitcoin itself as money. A study of El Salvador’s Bitcoin adoption and the actual uses by people and businesses in the area reported that the firms that use Bitcoin as a payment system are ‘mostly very large firms’ and ‘71% of sales are converted into dollars and then withdrawn as cash’. Others might respond that this 71% value is remarkably low compared to transactions in other payment forms. Fernando E Alvarez, David Argente and Diana Van Patten, ‘Are Cryptocurrencies Currencies? Bitcoin as Legal Tender in El Salvador’ (2022) 25 National Bureau of Economic Research (No. w29968).

98 Jess Cheng and Joseph Torregrossa, ‘A Lawyer's Perspective on US Payment System Evolution and Money in the Digital Age’ (2021) FEDS Notes Forthcoming. President’s Working Group on Financial Markets, and others, ‘Report on Stablecoins’ (2021) 2, <https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf>.

99 Mai Ishikawa, ‘Designing Virtual Currency Regulation in Japan: Lessons from the Mt Gox Case’ (2017) 3(1) Journal of Financial Regulation 125.

100 Adam Chodorow, ‘Bitcoin and the Definition of Foreign Currency’ (2016) 19 Florida Tax Review 365.

101 U.S. Const. art. I, § 10, cl. 1. See Tu and Meredith (n 23) 316, for further discussion regarding the Stamp Payments Act and its historical context.

102 U.S. Const. art. I, § 10, cl. 1.

103 Briscoe v Bank of Kentucky, 36 U.S. 257, 11 Peters 257, 9 L. Ed. 709, 7 S. Ct. 1149 (1837) (Story, J., dissenting).

104 Kate Rooney, Jordan Smith, and Darren Geeter, ‘Colorado Gov. Jared Polis on Plans to Accept Crypto Tax Payments: CNBC Crypto World’ (CNBC Crypto World, 2022) <www.cnbc.com/video/2022/02/15/colorado-gov-jared-polis-wants-to-make-the-state-a-leader-in-crypto-acceptance.html>.

105 Ronald A Brand, ‘Restructuring the US Approach to Judgments on Foreign Currency Liabilities: Building on the English Experience’ (1985) 11 Yale Journal of International Law 139.

106 Crystal Beal, ‘Foreign Currency Judgments: A New Option for United States Courts’ (1998) 19 University of Pennsylvania Journal of International Economic Law 101.

107 Neil Andrews, ‘Interpretation of Written Contracts’ (2016) Arbitration and Contract Law 229. Morton J Horwitz, ‘The Historical Foundations of Modern Contract Law’ (1974) Harvard Law Review 917.

108 Restatement (Third) of Foreign Relations § 823(1), reporters’ note 1 (1987).

109 Desan (n 87).

110 Joseph Parampathu, ‘Prison Labor: Capitalism Without Markets, Understanding the Economics of Totalitarian Institutions’ (2022) Center for A Stateless Society 7 <https://c4ss.org/content/56388>.

111 Karl Polanyi, The Great Transformation (Farrar & Rinehart, 1944) 60.

112 Harry T Baumann, ‘Equity: Specific Performance: Decrease in Money Value Subsequent to the Inception of an Option Contract Is Not Hardship’ (1952) 51(1) Michigan Law Review 110 <https://doi.org/10.2307/1285660>.

113 Frederick A Mann, ‘Specific Performance of Foreign Money Obligations?’ (1968) 31(3) The Modern Law Review 342. <www.jstor.org/stable/1092512>.

114 Deutsche Bank Filiale Numberg v Humphrey, 272 U.S. 517, 519. 47 S.Ct. 166 (1926).

115 Ibid, 519.

116 Hicks v Guinness, 269 U.S. 71, 46 S. Ct. 46, 70 L. Ed. 168 (1925).

117 Shavers, No. 4: 13-CV-416 (E.D. Tex. Aug. 6, 2013).

118 See Chodorow (n 100).

119 Hicks, 269 U.S. 71.

120 Preston v Prather, 137 U.S. 604, 11 S. Ct. 162, 34 L. Ed. 788 (1891), cited with approval in Hicks.

121 Legislative Assembly of El Salvador (n 1).

122 Eduardo Levy-Yeyati and Frederico Sturzenegger, ‘Classifying Exchange Rate Regimes: Deeds vs. Words’ (2005) 49(6) European Economic Review 1603.

123 Franco Modigliani and Enrico Perotti, ‘Security Markets Versus Bank Finance: Legal Enforcement and Investors’ Protection’ (2000) 1(2) International Review of Finance 81.

124 Jiaqi Liang and others, ‘Towards an Understanding of Cryptocurrency: A Comparative Analysis of Cryptocurrency, Foreign Exchange, and Stock’ (2019) 2019 IEEE International Conference on Intelligence and Security Informatics 137.

125 Jeong Hun Oh, ‘The Foreign Exchange Market with the Cryptocurrency and “Kimchi Premium”’ (2018) 22nd Bienniel Conference of the International Telecommunications Society <www.econstor.eu/bitstream/10419/190386/1/E1_1_Oh.pdf>.

126 See Polanyi (n 111) 60.

127 See President’s Working Group on Financial Markets, and others (n 98) 2.

128 Board of Governors of the Federal Reserve System, ‘Central Bank Digital Currency (CBDC) Research & Publications’ (Federal Reserve, 15 April 2022) <www.federalreserve.gov/cbdc-research-and-publications.htm>. Board of Governors of the Federal Reserve System, ‘Central Bank Digital Currency (CBDC) Frequently Asked Questions’ (Federal Reserve, 15 April 2022) <www.federalreserve.gov/cbdc-faqs.htm>.

129 Building a Stronger Financial System: Opportunities of a Central Bank Digital Currency: Hearing before the Subcomm. on Economic Policy of the Senate Committee on Banking, Housing and Urban Affairs, 117^th Cong. (2021). <www.banking.senate.gov/hearings/building-a-stronger-financial-system-opportunities-of-a-central-bank-digital-currency>.

130 Building a Stronger Financial System: Opportunities of a Central Bank Digital Currency: Hearing before the Subcomm. on Economic Policy of the Senate Committee on Banking, Housing and Urban Affairs, 117th Cong. (2021) (testimony of Neha Narula).

131 Ibid.

132 Building a Stronger Financial System: Opportunities of a Central Bank Digital Currency: Hearing before the Subcomm. on Economic Policy of the Senate Committee on Banking, Housing and Urban Affairs, 117th Cong. (2021) (testimony of Christopher Giancarlo).

133 Francesca Carapella and Jean Flemming, ‘Central Bank Digital Currency: A Literature Review’ (2020) FEDS Notes.

134 See Cheng and Torregrossa (n 98).

135 Federal Reserve, ‘Money and Payments: The US Dollar in the Age of Digital Transformation’ (2022) <www.federalreserve.gov/publications/money-and-payments-discussion-paper.htm>.

136 Ibid, 7, 13–14.

137 Orla Ward and Sabrina Rochemont, ‘Understanding Central Bank Digital Currencies (CBDC)’ (2019) Institute and Faculty of Actuaries 23.

138 Allen Franklin, Gu Xian and Jagtiani Julapa, ‘Fintech, Cryptocurrencies, and CBDC: Financial Structural Transformation in China’ (2022) 124 Journal of International Money and Finance 1.

139 Qi Chen, Suyi Dong and Jinqiao Li, ‘Outlook of Digital Currencies and Future Restrictions on Cryptocurrencies’ (2022) 7th International Conference on Financial Innovation and Economic Development 806.

140 Raúl Morales-Resendiz and others, ‘Implementing a Retail CBDC: Lessons Learned and Key Insights’ (2021) 2(1) Latin American Journal of Central Banking.

141 31 C.F.R. § 1010.100(m)(2022).

142 Scott A Wiseman, ‘Property or Currency: The Tax Dilemma Behind Bitcoin’ (2016) Utah Law Review 417 (arguing that the IRS classification was incorrect and discourages adoption of Bitcoin as a currency, through its pronouncement).

143 26 U.S.C. § 988 (e)(2)(b).

144 See Wiseman (n 142) 430–5.

145 Some authors have suggested a ‘reflexive’ legal approach to cryptocurrencies which acknowledges that the space will continue to be developing and that many actors in the space will continue to be seeking means to subvert legal restrictions. Thus, it can be argued that instead of attempting to effect a field-wide legal framework, or to create an international or national regulatory body dedicated to cryptocurrency, that the patchwork of legal issues can be solved in this multi-faceted way, which may be inherent to the space itself. See Immaculate Dadiso Motsi-Omoijiade, Cryptocurrency Regulation: A Reflexive Law Approach (Routledge, 1st edn 2022).

146 See Department of the Treasury (n 21) 1.

147 Ibid, 5.

148 Ibid, 5.

149 Jeremy Ciarabellini, ‘Cryptocurrencies' Revolt Against the BSA: Why the Supreme Court Should Hold That the Bank Secrecy Act Violates the Fourth Amendment’ (2020) 10 Seattle Journal of Technology, Environmental & Innovation Law 135.

150 United States v Mansy, No. 2:15-cr-198-GZS, (D. Me. May 11, 2017); United States v Faiella, 39 F. Supp. 3d 544, 545–6 (S.D.N.Y. 2014); United States v Budovsky, No. 13-cr-368, (DLC) (S.D.N.Y. May 3, 2021); United States v E-Gold, Ltd., 550 F. Supp. 2d 82, 88–93 (D.D.C. 2008); Ulbricht, 31 F. Supp. 3d 540, 570.

151 Christopher Lloyd, ‘The Privacy Revolution Begins: Did Carpenter Just Give Bitcoin Users a Chance to Strike Down the Bank Secrecy Act?’ (2020) 88 Georgetown Washington Law Review 204.

152 Carpenter v United States, 138 S. Ct. 2206, 585 U.S. 2018, 201 L. Ed. 2d 507 (2018).

153 Raphael Davidian, ‘Anti-Money Laundering Laws for Bitcoin Exchanges’ (2017) 36 American Criminal Law Review 26.

154 Carol R Goforth, ‘The Case for Preempting State Money Transmission Laws for Crypto-Based Businesses’ (2020) 73 Arkansas Law Review 301.

155 Courtney J Linn, ‘Redefining the Bank Secrecy Act: Currency Reporting and the Crime of Structuring’ (2010) 50 Santa Clara Law Review 407.

156 31 C.F.R. § 1010.100(m) (2022) defines currency as ‘coin and paper money of the United States or of any other country that is designated as legal tender and is customarily used and accepted as a medium of exchange in the country of issuance.’ Bitcoin cannot reasonably be considered ‘customarily used’ in El Salvador at this time, see Marcela García, ‘Nayib Bukele's Failed Bitcoin Experiment in El Salvador’ (The Boston Globe, 8 July 2022) <www.bostonglobe.com/2022/07/08/opinion/nayib-bukeles-failed-bitcoin-experiment-el-salvador/> See also, Anatoly Kurmanaev and Bryan Avelar, ‘A Poor Country Made Bitcoin a National Currency. The Bet Isn't Paying Off’ (N.Y. Times, 2022) <www.nytimes.com/2022/07/05/world/americas/el-salvador-bitcoin-national-currency.html>. Further, El Salvador cannot reasonably be considered a ‘country of issuance’ with regard to Bitcoin, see Part III.

157 Douglas King, ‘Banking Bitcoin-Related Businesses: A Primer for Managing BSA/AML Risks’ (2015) Retail Payment Risks Forum Working Paper, Federal Reserve Bank of Atlanta 10.