A recent ruling by the Third District Court of Appeal in Florida highlights how state and federal laws are evolving around the treatment of cryptocurrencies.

Joshua Ashley Klayman, a noted blockchain/cryptocurrency attorney who left Morrison & Foerster to start her own boutique firm Klayman last year, said, “While a few years ago, some may have believed, erroneously, that the creation of new technologies were altogether exempt from existing laws and regulatory frameworks, we have seen, and continue to see, a maturation of the crypto industry and a recognition that, in many cases, existing laws apply.” Klayman stressed she is not a litigator and isn't licensed to practice law in Florida.

Joshua Klayman is the Managing Member of Klayman a boutique blockchain law firm based in New York, and the CEO of Inflection Point Blockchain Advisors, LLC, a blockchain consulting firm.

Last week, the Florida appellate court reversed a lower court's 2016 decision by finding that cryptocurrency is indeed a financial or monetary instrument under state law. The case involved Miami Beach resident Michell Espinoza, who is charged with money laundering and acting as an unauthorized money transmitter for allegedly operating digital currency-trading website, as reported by sibling publication Daily Business Review. The appellate court ruled the trial court erred in dismissing the charges and remanded the case for further proceedings. Espinoza didn't dispute that he was not licensed to act as a money services business in the state, according to court documents.

Espinoza's attorney, Frank Prieto, said, “We respectfully disagree with the ruling. We think they made a big leap claiming that he was in the business of money transmitting. It sets a dangerous precedent for anyone selling personal property that they could be facing a criminal penalty for not having a money services business license.”

Klayman said the appeals court ruling demonstrates an increased understanding of the nuances in digital tokens. “We have seen more generally that a variety of different regulators, even within the United States, have asserted overlapping jurisdiction over virtual assets. For instance, one regulator may deem a digital token to be a form of property, while another classifies it as a commodity, yet another calls it a security, and another treats it as money.”

Gary DeWaal, Katten Muchin Rosenman

Gary De Waal, special counsel at Katten Muchin Rosenman in New York, who examined the case in his own blog, said in a brief interview: “What we tell clients is that just because last week you thought a state money transmitter regulator had a certain view on an exchange's cryptocurrency transactions, don't assume it is the same this week. You really have to stay on top of this one because the repercussions are quite severe for getting it wrong and state views are changing regularly.”