But is bitcoin a security?
Yes, because it is meets the definition of a commodity, and so writing contracts around it causes it to be regulated. Commodities include things like wheat and gold bars and bitcoin meets the same definition. I do not think anybody considers bitcoin "money" at this time but it is clearly a commodity AND a possible way to "transfer value". http://www.sec.gov/about/laws/sa33.pdf
Value transfer systems are highly regulated as described here:
https://bitcointalk.org/index.php?topic=200443.0And here:
http://cryptome.org/2012/05/fbi-bitcoin.pdfNot it is not a security. That was sorta the point of FinCen saying it was cash.
Also Gold & Silver are considered a legal currency now in several states and is gaining traction every day.
They're all regulated as cash and cash like instruments.