A ruling from Florida's Third District Court of Appeal is a sign of the times for the ever-changing world of cryptocurrency.

In an opinion issued Wednesday the appellate court held Bitcoin qualifies as a “payment instrument,” meaning, any exchange of the digital currency could require a money services business license. Without one, bitcoin traders could be subject to criminal prosecution under Florida law.

The case, Florida v. Espinoza, reached the Third DCA following an appeal from the Florida Attorney General's office. It included a 2016 ruling by Miami-Dade Circuit Court Judge Teresa Pooler, who decided in favor of the defendant, Michell Espinoza, in finding that cryptocurrency is not money under Florida law. And now, the appellate court's order has relegated the suit against Espinoza back to trial court.

Espinoza's attorney Frank Prieto said the Third DCA's ruling could have a chilling effect on cryptocurrency exchange in Florida.

“This opinion criminalizes people selling their own property, and that's not something we're going to sit back and stop fighting for,” the Miami lawyer said. According to Prieto, the court's opinion leaves interpersonal exchanges of Bitcoin vulnerable to criminal prosecution.

“The appellate court made a leap — and I don't think the record really bore this out — that my client Mr. Espinoza was in the business of buying and selling Bitcoin,” Prieto said.

Espinoza had been charged with two counts of money laundering as well as acting as an unauthorized money transmitter after selling Bitcoin to an undercover Miami Beach police officer. His attorney compared the allegations to scrutinizing someone selling a used car.

“If you stick a for-sale sign on your car, are you now in the business of selling cars?,” he asked. “On the money transmitter count I think [the Third DCA] got it wrong.”

Carlton Fields attorneys Matthew Kohen and Justin Wales say the parameters of the Third DCA's ruling may later be refined by the Florida Office of Financial Regulation or other courts. However, Wales said the court's definition of Bitcoin as a financial instrument raised more questions than it answered.

“If you look at the technology and what it's capable of, a better definition is a communicative network,” Wales said. “There's all sorts of applications that are nonfinancial that you could do through the Bitcoin network: authenticating records, time stamping, publishing political messages. And if the only way for me to go through that network is obtaining Bitcoin — because you need Bitcoin to incentivize the network validating your message — to what extent can you regulate any sale of bitcoin?”

Wales noted the Third DCA's opinion may also implicate other constitutional rights as Bitcoin becomes more widespread. “If we're really thinking about the extent of regulations on this technology … it becomes problematic,” he said.

As for Espinoza's case, Prieto said he and his client have not decided whether they're going to appeal just yet.

“We definitely have other grounds for dismissal in this case,” he said, mentioning due-process entrapment because of how the law enforcement sting enfolded. “We're not going to accept any plea offers that would involve Mr. Espinoza having a criminal record.”

A representative with the Florida Attorney General's office declined to comment, citing ongoing litigation.

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