New US Supreme Court Verdict Cites Bitcoin
It’s not everyday the highest court in the United States notices digital currencies such as bitcoin. But when they do, it is for something important; for instance, an opinion making a reference to cryptocurrencies.
The Supreme Court did so in its June 21 verdict on the Wisconsin Central Ltd. v. United States case involving a dispute over whether stock options for employees of Wisconsin Central Ltd. can be taxed as a type of compensation in the same manner that money is.
“The government argues that these stock options qualify as a form of “compensation” subject to taxation under the Act. In its view, stock options can easily be converted into money and so qualify as ‘money remuneration,’” the dissenting opinion said.
Ballotpedia explained that units of the Canadian National Railway Company lost their initial legal battles. Both district and appellate courts ruled the stock options are taxable under existing tax laws.
“The fact that cash and stock are not the same things doesn’t make a stock‐option plan any less a ‘form of money remuneration’ than cash. Indeed the railway offers its employees a choice to have an agent exercise an employee’s stock option, sell the shares of stock obtained by that exercise of the option, reserve part of the money received in the sale for taxes and administrative costs, and deposit the balance in the employee’s bank account. An employee who uses this method will thus experience the stock option as a cash deposit,” the appeals court said, backing the district court’s decision.
But the recent decision promulgated by the high court stated such stocks are not considered a “money remuneration” and the case should be “remanded for further proceedings consistent with this opinion.” It added remuneration is not limited to money because it also covers any kind of reward or compensation.
The document, crafted by associate justice Stephen Breyer and supported by Justices Ginsburg, Sotomayor and Kagan, stipulates the nature of what comprises money is less rigid than the interpretation of the majority, adding their perception about money “has changed over time” and “perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency.”
“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… [P]erhaps one day employees will be paid in bitcoin or some other type of cryptocurrency,” Breyer said.
“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,” the dissenting opinion added.
The court opinion has nothing to do with cryptocurrencies per se. However, the document implies some members of the top US court are compassionate to the concept that cryptocurrency is another form of money unlike properties like what the Internal Revenue Service once decided or commodities according to the view of the Commodity Futures Trading Commission (CFTC) and, more recently, an American district court judge.
Although this is too early to say, questions about the nature of bitcoin and its counterparts could make its way to the portals of the Supreme Court in the not-so-distant future. This, despite cryptocurrencies gaining ground within and outside the country as government and central banks have been enacting rules governing these emerging technologies.