Except the IRS has declared that bitcoin is property, not currency.
Q-1: How is virtual currency treated for federal tax purposes?
A-1: For federal tax purposes, virtual currency is treated as property. General tax
principles applicable to property transactions apply to transactions using virtual
The money laundering statute applies to the below:
(4) the term âoefinancial transactionâ means
(A) a transaction which in any way or degree affects interstate or foreign commerce involving
(i) the movement of funds by wire or other means or
(ii) one or more monetary instruments, or
(iii) the transfer of title to any real property, vehicle, vessel, or aircraft, or
(B) a transaction involving the use of a financial institution...
Note that "real property," is real estate, not any personal property whatsoever, and the term "monetary instrument" is likewise defined by the FDIC:
(1) Monetary instruments include:
(ii) Traveler's checks in any form;
(iii) All negotiable instruments (including personal checks, business checks, official bank checks, cashier's checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee (for the purposes of Sec. 1010.340), or otherwise in such form that title thereto passes upon delivery;
(iv) Incomplete instruments (including personal checks, business checks, official bank checks, cashier's checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) signed but with the payee's name omitted; and
(v) Securities or stock in bearer form or otherwise in such form that title thereto passes upon delivery.
So yes, there are very different regulations depending on whether bitcoin is or is not currency. Absent legislation specifically addressing "virtual currency," the courts will have to hash out this disagreement, which is what will happen here, I'm sure, but I think it's regrettable that someone can be punished for law that isn't yet decided. If I drive 55, should I be punished for skirting speeding laws? Are racetracks circumventing legislation against street racing? The problem with calling this money laundering isn't that this guy is punished (if he's guilty of running the Silk Road); it's that it opens up a whole other class of individuals for prosecution just because they were using bitcoin to conduct transactions -- namely everyone who conducts transactions in bitcoin.