As world governments begin to grasp that a virtual currency can and is being used as part of commerce and trade, it means that they must come to understand what that means for them. In most cultures that grow beyond barter and abstract value into currency also start to regulate the production and use of those currencies. In most cases, it’s through a central authority that controls the supply of that currency. In the case of Bitcoin, there’s no central authority, just exchanges that bring traders together and the traders themselves to supply value. Unlike dollars or coins, Bitcoins are virtual, special encrypted keys that represent values. To some this might mean BTC cannot be money; to others BTC is obviously money.

In the United States, a recent ruling by a judge essentially makes the claim that Bitcoin is money. Magistrate Judge Amos Maazant of the Eastern District of Texas federal court wrote a memorandum in a Ponzi scheme case involving Bitcoin and in that he reasoned that because BTC is traded like commodity money, it is therefore as like money as it needs to be. After all, the argument goes, even virtual money is 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.

Right on the heels of this memorandum, New York City opened up with a fusillade of subpoenas querying almost the entire whos-who of the Bitcoin world. It’s obvious that the nature of Bitcoin as money has stirred consideration in the US government (and not just Texas) that may yet blossom into a lot of questions about regulation and use.

These movements of governments raise a lot of questions: If BTC is regulated as money will its accumulation then be taxed? Can people exchanging it for goods expect that it will be tracked? Since numerous watchdogs have claimed that it’s the perfect medium for money laundering what does that mean for caches of Bitcoin of enormous value? After all, we had a “Bitcoin billionaire” moment not too many months ago.

Not just the US but soon the rest of the world

Although it seems like Texas is the first-past-the-post when it came to claiming that Bitcoin is indistinguishable from money–Germany’s Ministry of Finance has weighed in more directly by issuing an official statement making Bitcoin “Rechnungseinheiten” or essentially private money.

“We should have competition in the production of money. I have long been a proponent of Friedrich August von Hayek scheme to denationalize money. Bitcoins are a first step in this direction,” said Frank Schaeffler, a member of the German parliament’s Finance Committee, who has pushed for legal classification of bitcoins.

As a move, this places Germany at the forefront of thought about how virtual currencies intersect with local commerce and economy.

Having a legal status with any government also means that businesses operating there would have to live up to regulation. Operations that exchange in USD across many states must respect federal and state laws on the subject and it’s no different in Germany–one might suspect it’s the same with any given government across the world–however, having a legal status itself means that Bitcoin businesses need not survive in some sort of legal limbo.

Also importantly: It means that Bitcoin businesses in Germany will quickly know what regulations they need to adhere to and how to do that. Having this out of the way would give Germany a leg up in getting Bitcoin operations started within their borders that could couple German economy with a quickly-growing global economy driven by Bitcoin.

The same thought has crossed the mind of many while looking at the active probing of New York into the same thoughts of regulation.

Those states and countries who keep BTC at arms length may find themselves left behind by those who embrace it. Virtual currencies are a phenomena that arise directly out of structures like the Internet, and data, and the concepts embodied by these globalizing and democratizing networks.