Thursday marked a historic day for bitcoin, as the flagship cryptocurrency made its first appearance in an opinion published by the US Supreme Court.
The case, Wisconsin Central Ltd. v. United States, did not involve bitcoin’s regulatory or legal status. Rather, it examined whether employee stock options represent taxable compensation under the Railroad Retirement Tax Act of 1937.
That may seem like an unlikely place for a discussion of bitcoin to appear, however, as justices noted in both the majority and dissenting opinions, the case forced them to consider a fundamental question that has also taken on a renewed importance in the decade following the publication of the Bitcoin whitepaper: “What is money?”
Ultimately, the 5-4 majority ruled that employees should not be taxed for exercising stock options since the action does not constitute “money remuneration.”
However, writing in a dissenting opinion, Justice Stephen Breyer argued for a “broader understanding of money” and said that stock options should be classified as taxable compensation.
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Breyer’s opinion, which included a citation to Money: The Unauthorized Biography — From Coinage to Cryptocurrencies, used bitcoin as an example of the changing nature of money and theorized that “perhaps one day employees will be paid in Bitcoin or some other cryptocurrency.”
He wrote (citations omitted):
“Moreover, what we view as money has changed over time. Cowrie shells once were such a medium but no longer are; our currency originally included gold coins and bullion, but, after 1934, gold could not be used as a medium of exchange; perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency. 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.“
Justices Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan joined Breyer in his dissent.
While Thursday marked the first instance of the word “bitcoin” being included in a Supreme Court opinion, it’s unlikely to be the last. In fact, cryptocurrency’s perceived association with drug trafficking and other criminal activities could make a prominent appearance in a case whose petition is currently pending before the Court.
As CCN reported, Ross Ulbricht — operator of now-defunct dark web marketplace Silk Road — has appealed his conviction to the Supreme Court, arguing that the government violated his Fourth and Sixth Amendment rights during the investigation and sentencing (he is serving a life sentence without parole).
While the Supreme Court has not yet said whether it will hear Ulbricht’s case, legal expert Tom Goldstein has said that there is a “reasonable chance” that the constitutional questions raised by Ulbricht’s petition would earn a hearing from the Court “in an appropriate case.”