Bitcoin Theft Directive Proposal

The EU Commission recently proposed a Directive  on combating fraud and counterfeiting of non-cash means of payment.

Article 4 (a) would require Member States that the following is punishable as a criminal offence:

theft or other unlawful appropriation of a payment instrument;

A “payment instrument” is defined in Article 2 (a) as:

“payment instrument” means a protected device, object or record, other than legal tender, which, alone or with a procedure or a set of procedures, enables the holder or user to transfer money or monetary value or to initiate a payment order, including by means of digital mediums of exchange;

A “digital medium of exchange” is defined in Article 2 (d).

‘digital medium of exchange’ means any electronic money as defined in point (2) of Article 2 of Directive 2009/110/EC of the European Parliament and of the Council, and virtual currencies;

And “virtual currencies” are defined in Article 2 (e).

‘virtual currencies’ means a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically;

Bitcoin falls under this definition. That means that bitcoins are “digital means of exchange” and therefore “payment instruments” under this Directive.

That in turn means that Member States need to make it a crime to steal bitcoins under Article 4 (a) of the Directive.

Article 4 (b) also requires the following to be punishable as a criminal offense:

counterfeiting or falsification of a payment instrument in order for it to be used fraudulently;

So Member States would need to enact criminal law against counterfeiting bitcoins.

Obviously, no one can counterfeit bitcoins in the first place (as opposed to cash). Therefore, any such new statute would necessarily never be applied to anyone. The moment anyone could counterfeit bitcoins, Bitcoin’s value instantly goes to zero.

So this particular criminal law would be useless. But it would not harm anyone either.