Supreme Court Dissenting Justices Mention Bitcoin to Make Point
In a new Supreme Court decision in the case of Wisconsin Central Ltd. Et Al. v United States, a case unrelated to cryptocurrencies, the dissenting opinion — authored by Justice Stephen Breyer — notes bitcoin as an example of how views of “money” change over time. Even if peripheral, the citation marks the first explicit mention of bitcoin and cryptocurrency in America’s highest court, invoking the techs’ money-like qualities as opposed to casting them as property or commodities.
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What Counts as Money?
No one would’ve suspected that today’s Supreme Court decision in Wisconsin Central Ltd. Et Al. v United States would engender the high court’s first explicit mention of bitcoin, but, in looking into the nuts and bolts of the case, it makes a lot of sense.
The case, a taxation dispute first brought before the court in October 2017 but finally decided on June 21st, 2018, pitted said railroad company versus the U.S. government, insofar as the government asserted that the railroad’s stock option payments to employees counted as “money renumeration” and thus were subject to pension taxation per the Railroad Retirement Tax Act of 1937. On the flip side, both the railroad and its workers asserted the opposite, namely that these stock options weren’t “money renumeration” and thus not subject to the above Act and its prescribed taxation measures.
Alas, today’s announced majority opinion was written by newest justice Neil Gorsuch, who, along with court’s more conservative-leaning justices, sided in a 5-4 vote with the railroad in saying that stock options were not “money” and not subject to federal pension taxation.
But, as far as crypto is concerned, it was the dissenting opinion where things got interesting.
Dissenters Argue Stock Options Are Money, Point to Bitcoin to Highlight Fluidity of ‘Money’
The dissenting opinion for the case, authored by Justice Stephen Breyer and backed for the high court’s three other justices, argued that such stock options were “money renumeration” and Wisconsin Central Ltd. should face pension taxes as such.
“The railroads, as the majority notes, believe they can find the answer to this [case’s] question by engaging in (and winning) a war of 1930’s dictionaries,” Breyer began. “I am less sanguine.”
Justice Breyer then started arguing for the ambiguity of “money” as a concept, opening his pathway to the minority’s dissent:
“True, some of those dictionaries say that “money’ primarily refers to currency or promissory documents used as “a medium of exchange.’ See ante, at 2–3. But even this definition has its ambiguities. A railroad employee cannot use her paycheck as a “medium of exchange.’ She cannot hand it over to a cashier at the grocery store; she must first deposit it. The same is true of stock, which must be converted into cash and deposited in the employee’s account before she can enjoy its monetary value. “
And, immediately after these textual points, Justice Breyer specifically refers to bitcoin and crypto:
“Moreover, what we view as money has changed over time. Cowrie shells once were such a medium but no longer are, see J. Weatherford, The History of Money 24 (1997); our currency originally included gold coins and bullion, but, after 1934, gold could not be used as a medium of exchange, see Gold Reserve Act of 1934, ch. 6, §2, 48 Stat. 337; perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency, see F. Martin, Money: The Unauthorized Biography—From Coinage to Cryptocurrencies 275–278 (1st Vintage Books ed. 2015). Nothing in the statute suggests the meaning of this provision should be trapped in a monetary time warp, forever limited to those forms of money commonly used in the 1930’s.”
A biting and reasonable dissent, to be sure. Bitcoin’s and cryptocurrency’s first explicit reference by the high court is made all the more interesting in that Breyer cites a work that scholastically deals with cryptocurrencies as marking the latest milestone in the continuum of the concept of “money,” Felix Martin’s Money: The Unauthorized Biography.
In Breyer’s final sentence above, he begins to put the dissenters’ stake down, arguing that conceptions of money shouldn’t be tethered to a 1930s-level understanding of the concept, citing bitcoin and crypto peripherally to do so.
Why It Matters
The Supreme Court is America’s high court, and because of that, their legal say is final unless overridden by future high court decision’s or by Constitutional amendation.
Now, the case outlined above isn’t directly related to crypto, but Justice Breyer’s dissent offers a rare glimpse into the thinking of some of the high court’s members. As such, we can extrapolate that four members of the current U.S. Supreme Court would seemingly be likely to view, or at least be strongly sympathetic to viewing, cryptocurrencies as money if a crypto-relevant case ever comes before them.
It’s a key insight that simultaneously brings clarity and further ambiguity to the U.S. regulatory situation. Clarity, in that we can now more readily assume how four of the Supreme Court’s justices might rule in a “Is Bitcoin Money?” kind of case. Conversely, it brings further ambiguity because the case only peripherally dealt with crypto as an aside, and thus wasn’t a formal judgment, leaving America’s regulatory labyrinth to remain as is for now with yet another added wrinkle.
Of course, regulatory wrinkles we already have plenty of. The SEC thinks most tokens are “securities.” The IRS slots crypto as “property.” FinCen considers crypto to be “tender.” And the CFTC seems to lean toward seeing the fledgling assets as “commodities.” Breyer’s opinion adds another significant, though not immediately impactful, layer to the mix. We’ll keep our eyes on the court in the meantime.
What’s your take? Do you see a bitcoin-related case hitting the Supreme Court in the coming years? Let us know what you think in the comments below.
Images via Pixabay, Zimbio