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Photo source: https://www.flickr.com/photos/quinndombrowski/

Photo source: https://www.flickr.com/photos/quinndombrowski/

According to a story published last week in the Cleveland, Ohio, paper The Plain Dealer, merchants in the proposed “Bitcoin Boulevard” in the Cleveland Heights neighborhood will not be able to accept virtual currency for alcohol. According to the story, state officials claim that bitcoin’s status as a commodity, rather than a currency, are to blame.

On Friday, the Ohio Department of Public Safety ruled that “Bitcoin cannot be accepted as payment for alcohol in the State of Ohio.” The decision came in response to an inquiry from the Bottlehouse Brewing Co. about whether accepting bitcoin would jeopardize its liquor license. … Eric Wolf, agent-in-charge with the Ohio Investigative Unit of the Ohio Department of Public Safety in Columbus, said that because Bitcoin’s value fluctuates so much, it is more like a commodity and “not recognized as legal currency.”

In a post on Reddit, Bitcoin Boulevard organizers have lamented the decision, claiming that the policy “marks a first for a US regulatory agency to effectively ban bitcoin.” Nikhil Chand, founder of Bitcoin consultancy CoinNEO, said in the post:

I personally think their conclusion is unfortunate, and is indicative of the type of senseless obstructionism small businesses face from many antiquated and complicated laws and regulations. But, it makes for an interesting new chapter to the Bitcoin story and an interesting topic to present at our launch event. I fear this will set a precedent for other areas of the US as Bitcoin continues adoption and so I plan to do whatever I can to keep this issue alive.

One additional factor complicating the decision is an existing law on Ohio’s books forbidding anything other than dollars to be used for the buying and selling of alcohol. The law also limits the use of gift cards for on-site alcoholic purchases, and has been a noted headache for the state’s casinos, where chips are often traded for drinks.

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