Yesterday’s post discussed virtual currencies (e.g., Bitcoin) and the General Corporation’s law prohibition on issuing or putting into circulation money. But what exactly is money? The General Corporation Law has no answer. I’m aware of at least three different California statutes that define “money”.
Government Sanction Seems To Be The Sine Qua Non Of Money
First, we have the California Uniform Commercial Code which defines “money” in Division 1 (we use the term “Divisions”, not “Articles) as follows:
“Money” means a medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries.
Cal. Comm. Code § 1201(b)(24). This definition clearly focuses on the idea of governmental sanction. See Sayble v. Feinman, 76 Cal. App. 3d 509, 514 (1978). A more subtle question is whether virtual money could constitute a “good” for purposes of Division 2 of the California. As I trust my former students will remember, Section 2105(a) defines “goods” to mean all things that are movable at the time of identification to the contract for sale other than money in which the price is to be paid, investment securities and things in action. When a virtual currency is being exchanged (i.e., moved about) other than as payment, is it a good, or perhaps a virtual good?
The erstwhile Department of Financial Institutions licenses and regulates money transmitters pursuant to the Money Transmission Law, Cal. Fin. Code § 2000 et seq. That law defines “money” in almost identical terms to the Commercial Code. Cal. Fin. Code § 2003(n). The meaning of money is important under the Money Transmission Law because one the three activities constituting “money transmission” is receiving money for transmission. Cal. Fin. Code § 2003(o). Curiously, the other two activities don’t involve money per se. Thus, “money transmission” also means selling or issuing payment instruments or stored value.
The third definition is found in the Uniform Foreign Money-Claims Act and is slightly different: “‘Money’ means a medium of exchange for the payment of obligations or a store of value authorized or adopted by a government or by intergovernmental agreement”. Cal. Code Civ. Proc. § 676.1(7).
All three of the definitions require authorization or adoption by a government or governmental agreement. In this respect, they are similar to the definition adopted by the U.S. Department of Treasury in 31 CFR § 1010.100(m), but the federal definition specifically requires designation as “legal tender”, a concept apparently rejected by the drafters of the Uniform Commercial Code definition.