Bitcoin Boulevard faced its first major setback with the Ohio Department of Public Safety ruling that shops cannot sell alcohol with Bitcoin.

Bitcoin Boulevard is a movement that started in The Hague, Holland that aims to have shopping, events and other activities themed upon Bitcoin. It launched on March 20 and includes local businesses like restaurants, coffee houses and others with the common goal of accepting Bitcoin.  There is also a Bitcoin ATM.

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The movement recently spread to the U.S. in Cleveland Heights, whose participating businesses hope that their initiative will help transform the neighborhood into more of a high-tech business district and even become a model for Northeast Ohio. Participating shops include restaurants, specialty food stores, bars and others geographically located on Lee Rd. Businesses generally accept payments in Bitcoin and have it immediately converted to dollars to minimize their exposure. Bitcoin Boulevard is set to officially debut on May 1, although businesses have already been accepting Bitcoin on their own.

Merchants had warmly received cryptocurrency, enjoying a zero-dollar cost of entry and lower fees than those levied by credit cards.

The founder, Nikhil Chand, had done his due diligence. He patiently consulted with regulators as to the legality of alcohol-for-bitcoin sales. The federal Alcohol and Tobacco trade bureau gave him the green light. However, following an inquiry from Bottlehouse Brewing Co, the Ohio Department of Public Safety said no: “Bitcoin cannot be accepted as payment for alcohol in the State of Ohio.” Cleveland.com reports that Eric Wolf of the Department’s Investigative Unit deemed that because of Bitcoin’s high volatility, it behaves more like a commodity and is “not recognized as a legal currency”.

After some research, it is somewhat unclear why the classification of Bitcoin as property (for tax purposes) should impede its exchange for alcohol. It has been suggested that the Ohio Liquor Control Law restricts the use of gift cards for purchase, but no reference can be found for the exchange of general property, and even the restrictions on gift card usage are far from universal.

This is technically be a major setback for the U.S. movement, as 3 out of the 8 participants are alcohol-oriented businesses. In general though, they are hoping that the movement will gain further traction in the broader Cleveland area.