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The United States Constitution, Article I, Section 8 reads in part,

The Congress shall have Power To coin Money, regulate the Value thereof, and of foreign Coin.

From this passage, I understand that only Congress has the power to create and regulate currency (a means of payment and a store of value) in the United States. Congress may also delegate some or all parts of this power, which they have done in favor of the Federal Reserve. By that understanding, any instrument used as a means of payment and a store of value not produced by Congress or under Congressional mandate violates Article I, Section 8 of the Constitution. A recent example of such a violation is the Liberty Dollar, a privately minted coinage distributed and redeemable within the United States and backed by precious metals.

Given that Congress has been explicitly given the power to coin and regulate the value of money in the United States, how are cryptocurrencies, such as Bitcoin, Ethereum, and Basis created, distributed, and redeemed such that they have not been found unconstitutional?

As a slight tangent, what laws allow for the creation and distribution of cryptocurrencies?

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    It doesn't say it shall have the exclusive power to coin money, there have been alternative currencies in the US for years, like Berkshares or Disney Dollars. The issue is that these alternative currencies do not hold the same debt clearing power as federally issued coin, and are not "legal for all debts" like federal money is.
    – Ron Beyer
    Commented Oct 5, 2018 at 17:13
  • And a more famous version: the Tenino wooden currency that was printed during the great depression by a small town in Washington.
    – Ron Beyer
    Commented Oct 5, 2018 at 17:21
  • It also says "coin", not "money" or "currency".
    – user6726
    Commented Oct 5, 2018 at 17:43
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    @user6726 coin Money
    – paparazzo
    Commented Oct 5, 2018 at 23:45
  • As an aside, NotHous's Liberty Dollar was problematic under 18 U.S.C. § 486 (a counterfeiting statute), not under Article I Section 8.
    – OpenAI was the last straw
    Commented Sep 2, 2022 at 13:29

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The Constitution only regulates the powers of the government; it doesn't directly say what the people can and can't do. In particular, it doesn't say directly that nobody except Congress can coin money. However, it does give the government the power to make laws, which are binding on the population.

So Congress possibly could make a law forbidding cryptocurrencies, or at least regulating them, under the "regulating the value thereof" clause. However, they haven't done so.

In the case of the Liberty Dollar, there are some specific laws that apply. They were convicted of violating 18 USC 485, which forbids the making of physical gold or silver coins that resemble US or foreign money, and 18 USC 486, which forbids creating or passing any physical metal coins as money (as well as other conspiracy charges, aiding and abetting, etc). None of these laws apply to cryptocurrency because they are not physical metal coins.

Given that Congress has been explicitly given the power to coin and regulate the value of money in the United States, how are cryptocurrencies, such as Bitcoin, Ethereum, and Basis created, distributed, and redeemed such that they have not been found unconstitutional?

The power to regulate includes the power to not regulate.

As a slight tangent, what laws allow for the creation and distribution of cryptocurrencies?

In a free society, "everything is permitted that is not forbidden". We don't need a law specifically allowing the creation and distribution of cryptocurrencies; it's sufficient that there is no law that forbids it.

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  • Those laws are under a "Counterfeit and Forgery" title, and mention "current money", which I couldn't find a definition for. It may well be that the problem was that it was passed off as a dollar, not as a valuable object.
    – David Thornley
    Commented Oct 5, 2018 at 19:43
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    I would note that the Constitution does explicitly prohibit states from coining money.
    – pboss3010
    Commented Oct 10, 2018 at 11:52
  • @DavidThornley That was indeed the problem. Liberty dollars had many design features in common with US currency, and when trying to spend "liberty dollars" its creator said things like "These are the new dollars", causing people to think that they were legal tender. rationalwiki.org/wiki/Liberty_Dollar
    – Paul Johnson
    Commented Oct 10, 2018 at 16:30
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    @NateEldredge so if Monopoly used coins (and I don't remember if it does or not for smaller amounts), it would be in violation? People used to use NY subway tokens (when they still existed) as tender from time to time. Did anyone ever get charged with a Federal crime for that?
    – grovkin
    Commented Apr 23, 2020 at 15:10
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    @grovkin: Well, it's hard to know whether to interpret that as an indication of what is theoretically allowed or prohibited by the statute, or just as an indication of the government's discretion in deciding what to prosecute. (As to the half-size ads, see 31 CFR 411.1 which allows one-sided reproductions of paper money if they are significantly larger or smaller than actual size.)
    – Nate Eldredge
    Commented Apr 23, 2020 at 16:26
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One question is whether Bitcoin etc. are money in a legal sense. They don't attempt to link themselves to any actual currency. It's perfectly legal to trade without actual money. Commerce is generally done (in the US) in US dollars, partly because everybody else does it, and party because the IRS needs accounting in dollars for tax reporting purposes.

The last I heard, cryptocurrency was not considered to be money in the US. There may have been different rulings since then (I'd estimate I heard of the earlier ruling something like five years ago).

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  • I think they are considered a commodity. You are required to report cryptocurrency exchange transaction to the IRS.
    – grovkin
    Commented Apr 23, 2020 at 8:31
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    @grovkin Its more complicated. They are considered money for the purposes of anti money laundering laws, but not for legal tender or taxation laws.
    – Paul Johnson
    Commented Oct 17, 2020 at 16:12
  • Crypto is not "legal-tender" which means sellers do not need to accept it like dollars for a purchase. Crypto does have a dollar value associated with it, like a commodity, so if one BitCoin is equal to $20 dollars at time of exchange, the coin can be traded to those who accept for $20 of another product.
    – hszmv
    Commented Apr 5, 2021 at 18:24
  • @hszmv Surely it's more like a security, since you could equally well trade it for $10 of product, or $30.
    – OpenAI was the last straw
    Commented Mar 6 at 16:58
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One can create and trade in valuable items without making them money. People cast and trade in platinum ingots, for example. People trade in stocks which are not physical, although they have value, and dollar value at any given moment.

What makes something "currency" or "money" or "legal tender" is that a creditor is required to accept it in payment of debt. (and the government is required to accept it in payment of taxes.)

If I owe someone a thousand dollars and I offer 10 one hundred dollar bills, my creditor must accept that as payment. But if I offer a crypto currency now valued at, as $1,100.00 my creditor can accept or decline, just as if I offered a used car with a blue book value over $1,000. That is barter, not payment in money.

Addition as of 16Sep 2020: It should be noted that the above applies only to debts, not to purchases. A US store is free to refuse cash, as some restaurants now do, because there is no pre-existing debt; but if a person owes an existing debt to another, the creditor must (in the US) accept official US money as payment at face value, that is what "legal tender" means.

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