Published on:

Florida Cash for Bitcoin Business Owner Charged With Engaging in Money Transmission Without a License

In Florida, a person or business may not engage in the money services business unless the person or business is licensed or exempt from being licensed by the state of Florida. A violation of this law involving more than $300 is a felony crime. A money services business is defined by Florida statutes as a person or business that acts as a payment instrument seller. A payment instrument is a check, money order, electronic instrument or similar instruments to exchange tor goods and services. Basically, it is anything of monetary value.

In a case south of Jacksonville, Florida, the police identified a person who would buy and sell bitcoin for cash. Presumably, the police targeted this person because they believed he would accept stolen credit cards and other forms of illicit payment in exchange for bitcoin. Bitcoin is an anonymous form of currency so law enforcement may be concerned about people who transact business with this digital currency. A police officer made a few undercover purchases of bitcoin from the subject for cash. They subsequently arrested him because he was not licensed to do business as a money transmitter. Clearly, someone cashing checks or changing foreign currency for US currency would fit within the definition of a money transmitter and need a state license.  In this case, the criminal defense attorney argued the defendant was not subject to this law and did not need to obtain a money transmitter license because bitcoin did not fall under the definition of a payment instrument. Bitcoin was not invented when the Florida money transmitter statute was created so the statute could not have contemplated the inclusion of bitcoin.

Bitcoin is fairly complicated, but it can be described as a system that allows payments to be made through a decentralized process that does not involve a bank. It is a digital currency that is produced electronically by computers. All bitcoin transactions are recorded on a ledger, and each block in this chain of transactions is encrypted. Bitcoin can be stored or exchanged on this ledger that is completely open so all transactions can be verified. So, it is certainly not money or currency in the traditional sense. However, the court did not limit its analysis to whether this digital currency was “money”. The court looked at the fact that bitcoin can be exchanged like money and had monetary value.  In fact, there are many businesses who accept bitcoin, although not as many as before when bitcoin had much higher value. While the criminal defense lawyer wanted the court to focus on the fact that bitcoin does not resemble actual money, perhaps making an argument about the tangible nature of money, the fact that bitcoin can be and is used to pay for goods and services and a market exists to exchange bitcoin for traditional currency doomed that argument.