Should bitcoin be regarded as money or as a commodity? The question is causing a serious rift within the Dutch bitcoin community.
The legal status of bitcoin in the Netherlands may be determined by the decision of a court of appeals, expected in the next few months. But far from being united, the bitcoin community in the country is split in its views on the desired outcome of the appeal.
It all started in August 2012, when one user bought 2,750 bitcoins, at €8.05 apiece, from another one, and paid them more than €22,000 but only received 990 bitcoins. The seller did not send them the rest and when the buyer decided to cancel the deal, ignored their demand to reimburse him. In June 2013, the affair was taken to court. But the buyer decided to sue not just for the €14,000 that he never received back, but also for compensation for profits he could have made with the rest of the bitcoins. The price of cryptocurrency having reached €70 at the time, the 1,760 bitcoins he never received were then worth more than €120,000.
The court case became a source of vivid discussion. If bitcoin was considered money, the user had indeed reason to claim compensation for lost profit. If it was not, he was entitled only to the sum of €14,000. The situation was complicated by the fact that there is no definition of money in Dutch law. Finally, on May 16th, 2014, the court of Overijessel ruled that bitcoin was not money but “a medium of exchange”.
After a number of discussions, Jouke Hofman, the CEO of the Dutch bitcoin exchange Bitonic and a member of the board of the Dutch Bitcoin Foundation, decided to appeal the verdict and prove that bitcoin is money. He argued that bitcoin would benefit if classified as money and it would become easier for bitcoin companies to agree on terms with customers, business partners, and governments. The ‘Bitcoin is Money’ initiative was launched to collect necessary funds for a court appeal and the sum was quickly raised. However, when the money was raised, it turned out that a great portion of Dutch bitcoin enthusiasts did not like the idea.
They said that while bitcoin is not considered money, it is not excessively regulated, giving bitcoin companies more possibilities if they do not deal with fiat currency. (CoinFox has recently written about the same issue in the cases of Blockchain.info and Chinese exchanges). If the court decides that bitcoin is money, said Dutch bitcoin enthusiasts, it would create a privileged situation for the few Dutch companies able to comply with the necessary financial regulations. They argued that it was the main reason behind Hofman’s decision: his startup, Bitonic, aims to become the first completely regulated bitcoin exchange in the Netherlands and therefore will have to comply with these rules anyway.
As opponents claimed that the Dutch Bitcoin Foundation, which backed the appeal, did not represent them, two of the three members of the board (including Jouke Hofman himself) decided to resign. Their places were taken by those who opposed the ‘Bitcoin is Money’ initiative. Currently, the organization has proclaimed it has nothing to do with the initiative because
“Bitcoin is much more than money. The financial applications of decentralized Blockchain technology are only the tip of the iceberg”.
It is not, however, interfering with Bitonic pursuit of its goal. According to Hofman,
“satisfying everyone is our aim, but we are aware of the fact that this is not always possible”.
The appeal has been officially submitted and the court is expected to make a decision in few months.
