Source: http://blog.caseybroughton.ca/2016/05/defacing-us-currency_8.html?showComment=1522585796515
Timestamp: 2019-04-23 04:18:58+00:00

Document:
Time to continue the not-really-a-series “Casey gets way too into researching something and decides to write a blog post about it” that started with Days of Our Lives. This year: US currency defacement.
TL;DR: Yes, defacing bills is technically always illegal. But really don’t worry about it.
I figured that I would expand upon this idea here.
Whoever fraudulently alters, defaces, mutilates, impairs, diminishes, falsifies, scales, or lightens any of the coins coined at the mints of the United States, or any foreign coins which are by law made current or are in actual use or circulation as money within the United States; [or attempts to use such a coin] … Shall be fined under this title or imprisoned not more than five years, or both.
[18 U.S.C. § 331] means that you may be violating the law if you change the appearance of the coin and fraudulently represent it to be other than the altered coin that it is. As a matter of policy, the U.S. Mint does not promote colo[u]ring, plating or altering U.S. coinage: however, there are no sanctions against such activity absent fraudulent intent.
This definitely does prevent bill mutilation under any circumstances. Note the lack of a “fraudulently” qualifier or any other requirements for maleficent intent. There is some wiggle room created by the requirement of having “intent to render such bank bill … unfit to be reissued”, which is why stamping, stapling, pinning, or even writing (in small amounts) on bills is legal. However, you are likely out of luck if you were intending to, say, wallpaper your house with Benjamins (though that idea was likely ill-advised anyway).
The Constitution Saves the Day?
After reading about this seemingly-arbitrary difference between bills and coins, a libertarian-minded person might be thinking, “Why should the government get to prevent me destroying my own money? What about my constitutional rights?” Well, it turns out, the Constitution may indeed have something to say about this, and to understand why one must examine the similar issue of flag desecration.
In 1989, the Supreme Court (in Texas v. Johnson) effectively stuck down this law, claiming that flag burning as “expressive conduct” was “protected speech” under the First Amendment. In the wake of this decision, Congress attempted to amend the law to make it constitutional by prohibiting the mistreatment of the flag regardless of political message (basically just removing the “cast contempt” part). During the consideration of the amendment bill, “former U.S. Attorney General William Barr testified that any regulation protecting something purely for its symbolic value would be struck down as unconstitutional” (Wikipedia). The Senate Judiciary Committee presumably rejected this argument, as they wrote in their report that “Barr’s theory would render 18 U.S.C. § 333 [the prohibition on money desecration] unconstitutional as well” (Wikipedia again) and the bill was passed into law. In 1990, the amended Flag Protection Act was again struck down by the Supreme Court in United States v. Eichman, in which it was again decided that flag burning was protected speech.
So where does that leave burning or defacing bills? Likely in a legal grey area. Having never actually been declared unconstitutional by the Supreme Court, 18 U.S.C. § 333 is still most definitely a law that people can be prosecuted under. However, if the case made it to appeal, the precedent of United States v. Eichman would prove difficult for the prosecution to refute. Furthermore, there have been several very public money-burning demonstrations by public figures in the recent past (again, see Wikipedia), but as yet no prosecution, as far as I am aware. One can therefore plausibly conclude that: (a) the government is refraining from prosecuting money-desecrators due to the legal difficulty of doing so, (b) that they do not care enough about small-scale money burning to prosecute regardless, or (c) some combination of the two.
However, neither I nor far better-qualified individuals can find a statute banning the destruction or defacement of bills. This notably came to public attention when a Calgary radio station burned $5000 at the behest of an online poll. According to a National Post article chronicling the event, “Calgary police confirmed that the law only forbids the destruction of coins, not banknotes.” Good luck trying to burn the new money, though.

References: § 331
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 § 333
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 § 333
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