In an era of economic hardship yet rapid technological advance, digital currency is often viewed as a beacon of hope for the future. Bitcoin, the internet’s most popular digital currency, has its skeptics due to the currency’s unpredictable fluctuation in value as a result of its deregulation. Still, many use the currency on a daily basis, and several investors are hoping to cash in on the currency if it ever truly takes off.
A new investigation by the Congressional Research Service may dash the hopes of those opportunistic early adopters. After extensively researching Bitcoin, the organization claims that the existence of the digital currency may violate a relatively ancient law: the Stamp Payments Act of 1862.
The Stamp Payments Act was originally designed to discourage institutions from issuing money with a sum of less than $1. The law reads: “Whoever makes, issues, circulates, or pays out any note, check, memorandum, token, or other obligation for a less sum than $1, intended to circulate as money or to be received or issued in lieu of lawful money of the United States, shall be fined under this title or imprisoned not more than six months, or both.”
The way Bitcoin works is by breaking a single digital “coin” into extremely tiny values, which could potentially dip below $1. According to the provisions outlined by Stamp Act, this could technically make the online institutions that issue Bitcoin illegal.
According to some finance scholars, whether or not Bitcoin will be allowed to continue in the United States mostly depends on whether the government will want to take action against it, not necessarily the violation of The Stamp Act in particular.
“A lot depends on whether the government becomes anxious to move against Bitcoin. Whether this is the most appropriate statute under which to control Bitcoin, I’m not so confident,” said Darrell Duffie, finance professor at Stanford University, via Wired.
According to this Quora response as well as information found on several Bitcoin-specific sites, early adopters of the currency have long viewed the Stamps Payment Act of 1862 as a potential threat to Bitcoin's future.