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Foreign-exchange considerations & Bitcoin

By Craig Wright | 17 Oct 2018 | Bitcoin & Blockchain Tech

The inherently international nature of Bitcoin lends its use to the requirement to account for foreign-exchange valuations. This does not even need to be associated with international transactions. The treatment of bitcoin as a currency[1] leads to the requirement to account for the exchange rates when bitcoin is purchased or exchanged for goods and services. This becomes further complicated when its use as a global currency is extended into the purchases of goods and services from different jurisdictions[2].

Notes:

[1] In Securities and Exchange Commission v Trendon T. Shavers and Bitcoin Savings and Trust, Case №4:13-CV-416 (E.D. Tex), Magistrate Judge Amos Mazzant stated:

“The term “security” is defined as “any note, stock, treasury stock, security future, security-based swap, bond…[or] investment contract…” 15 U.S.C. § 77b. An investment contract is any contract, transaction, or scheme involving (1) an investment of money, (2) in a common enterprise, (3) with the expectation that profits will be derived from the efforts of the promoter or a third party. SEC v. W.J. Howey & Co., 328 U.S. 293, 298–99 (1946); Long v. Shultz Cattle Co, 881 F.2d 129, 132 (1989). First, the Court must determine whether the BTCST investments constitute an investment of money. It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money” (emphasis added)

Available from

http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.23.0.pdf, accessed 14 January 2014.

[2] The appropriate law of a contract is the system of domestic law that defines the obligations assumed by the parties to the contract. International law does not thoroughly define the requirement needed in a contract. The status is clearest where the parties have explicitly chosen the law that will apply in the contract. The parties may expressly choose the body of law, which will apply to all or part of their contract including offer and acceptance.

The UK requires that the parties must expressly choose to include the Hague Uniform law (Art.3, s.1 (3) Uniform Laws on International Sales Act 1967) [ULIS] in the contract terms before it applies to the sale of goods. This can if included have an impact on the process of offer and acceptance. Where there is knowledge of the residence or place of business of the contracting parties who each exist in a different state, several results arise in the case of a web site operation (for instance). Either “the contract concerns the sale of goods which are to be carried from one state to another or the acts constituting offer and acceptance have been effected in different states or the goods are to be delivered to a state other than that where the acts constituting offer and acceptance have been effected” (Schu, 1997).