NotHaus's Liberty Dollar says nothing about 'legal tender'...
Over the years, there has been some discussion about "legal tender laws" in the United States. I talked to a legal expert about it, and discovered – as I suspected – that it doesn't mean quite the same thing as many people think it does. Here is my (non-expert) explanation.
The present legal tender law in the US is Section 5103 of title 31, United States Code, which reads:
"United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts."
Contrary to popular imagination, this does not ban people from using other forms of currency. It simply defines what a "Dollar" is, in a contract or obligation that is denominated in Dollars.
You could make a contract denominated in Bitcoin, if you want to. You could make a contract denominated in Euros. You could even make a contract defined in "gold Dollars", or something of that sort. But, if the contract is simply for "Dollars," then this statute defines, for legal purposes, whether you have made payment in an appropriate medium of transaction.
One effect of the legal tender law is that it allows debts and obligations to be discharged in a cheaper form of "Dollars" than coins made of gold and silver. Thus, it in effect enables floating fiat Federal Reserve notes and deposits to be used in payment of "Dollar" debts.
If a "Dollar" was exclusively defined as a gold coin of a specific weight, then floating fiat Federal Reserve notes would be useless, just bits of colored paper. They could not be used in payment, any more than the "Dollars" which are included in the board game Monopoly.
It is doubtless true that the US government suppresses and blocks use of alternative currencies – especially those based on gold – through various means. This could be through regulatory burdens, taxes, and many other forms of harassment. They have to do it this way, because it is not actually illegal to transact business in whatever form of "money" the parties to the transaction agree upon.
Beginning in 1998, a private businessman, Bernard von NotHaus, began to issue a warehouse receipt currency called "Liberty Dollars" based on gold and silver. In 2007, the Federal Bureau of Investigation raided the vaults of the Liberty Dollar, and confiscated $7 million of gold and silver bullion. The seizure warrant was for money laundering, mail fraud, wire fraud, counterfeiting, and conspiracy.
Note that none of these charges have anything to do with "legal tender", or any restrictions on people to transact in the currency of their choice.
In 2009, von NotHaus was arrested and charged with: one count of conspiracy to possess and sell coins in resemblance and similitude of coins of a denomination higher than five cents, and silver coins in resemblance of genuine coins of the United States in denominations of five Dollars and greater, in violation of 18 USC. § 485, 18 USC. § 486, and 18 USC. § 371; one count of mail fraud in violation of 18 USC. § 1341 and 18 USC. § 2; one count of selling, and possessing with intent to defraud, coins of resemblance and similitude of United States coins in denominations of five cents and higher, in violation of 18 USC. § 485 and 18 USC. § 2; and one count of uttering, passing, and attempting to utter and pass, silver coins in resemblance of genuine US coins in denominations of five Dollars or greater, in violation of 18 USC. § 486 and 18 USC. § 2.
Prosecutors actually argued in court that the 90% silver Liberty Dollar coins were a counterfeit of the common twenty-five cent piece. The Associated Press reported: "Federal prosecutors successfully argued that von NotHaus was, in fact, trying to pass off the silver coins as US currency. Coming in denominations of 5, 10, 20, and 50, the Liberty Dollars also featured a Dollar sign, the word 'Dollar' and the motto 'Trust in God,' similar to the 'In God We Trust' that appears on US coins." A jury actually found him guilty of the charges, which suggests the degree of influence brought to bear upon the legal system to get the outcome that the prosecutors desired.
Obviously, we have a de facto prohibition on any gold- or silver-based currency that poses a significant challenge to the dominance of the floating fiat Federal Reserve "Dollar".
The government seems to be terrified even of rinky-dink operations like the Liberty Dollar. Just as obviously, there is no actual legal prohibition on such, or there would be no need to resort to laughable "counterfeiting" arguments.
You might also conclude that Bitcoin is not considered a great enough challenge to bother with.