Is it Illegal to Scrap Coins?

Is it illegal to scrap coins?

This is a common question for those who have been collecting for years and have amassed an extensive collection.

The answer is yes and no, but we’ll explain everything you need to know about this topic in this article!

Is it Illegal to Scrap Coins?

According to the United States Law:

82.1 Prohibitions.
Except as specifically authorized by the Secretary of the Treasury (or designee) or as otherwise provided in this part, no person shall export, melt, or treat:
(a) Any 5-cent coin of the United States; or
(b) Any one-cent coin of the United States.

Code of Federal Regulations (CFR) Title 31, Subtitle B, Chapter 1, Part 82, Section 82.1

As you can see here, the focus is on pennies and nickels.

You cannot melt down either of these coins.

However, Section 82.2 of that law lists the exceptions. Here’s the one of interest:

(b) The prohibition contained in § 82.1 against the treatment of 5-cent coins and one-cent coins shall not apply to the treatment of these coins for educational, amusement, novelty, jewelry, and similar purposes as long as the volumes treated and the nature of the treatment makes it clear that such treatment is not intended as a means by which to profit solely from the value of the metal content of the coins.

Code of Federal Regulations (CFR) Title 31, Subtitle B, Chapter 1, Part 82, Section 82.2

So, it turns out that those machines where you can squash a penny into an oval shape that you often see at state parks and other attractions are legal.

In a nutshell, you’re clear if you’re doing it for enjoyment, accessories, or other arts and crafts and projects.

You’ll notice that there’s a very specific bit of wording in that law, though.

Profiting from Metal Content of Coins

You can’t profit just from the value of the metal in the coins.

So, if you make jewelry or trinkets and sell them, you’re essentially earning money from the materials used and the effort put into creating them.

So, it’s all good. Well, what’s considered illegal is if you acquire a large number of coins, melt them down, and proceed to sell the resulting bullion as scrap metal.

“Why on earth would someone do this?” you ask.

Well, you see, one could make a nice profit on rare occasions.

Well, in 2011, the American economy wasn’t doing so great.

The nickel was worth less than the metal used to make it.

Technically speaking, you could gather a whole bunch of nickels, melt them down, and then sell the resulting metal for a profit.

Well, this would be quite bothersome for the US Mint.

That is why a law prohibits the melting down of low-value coins.

If folks catch on and launch fresh scrap metal ventures, there’ll be a monetary burden on the US government to produce new coins.

It would cost you more than you’d get.

This has been a common problem throughout history.

When the materials of a coin exceed its value, folks tend to melt it down and exchange it for cash rapidly.

If caught with an underground coins-for-scrap business, they could face $10k in fines and up to 5 years in prison.

18 U.S. Code § 331 – Mutilation, Diminution, and Falsification of Coins

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
Whoever fraudulently possesses, passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or brings into the United States, any such coin, knowing the same to be altered, defaced, mutilated, impaired, diminished, falsified, scaled, or lightened—
Shall be fined under this title or imprisoned not more than five years, or both.

US Code, Title 18, Part 1, Chapter 17, Section 331

This is a commonly cited one all over the web, but it’s incomplete.

Folks often leave out the word ‘fraudulently.’ This word is of great significance.

So, when it comes to defacing, mutilating, diminishing, and so on, it’s only considered illegal if it’s done with fraudulent intent.

So, if you’re not attempting to commit fraud, such as altering a penny to look like a dime and using it as currency, then you’re good to go.

I don’t think making a ring out of a quarter is an attempt to commit fraud.

Other Coins

Well, there isn’t a lot to talk about here.

It’s highly unlikely that the other types of US coins will ever be valued lower than their metal composition.

The only coins specifically mentioned by law are the penny and the nickel.

So I’m saying that quarters, dimes, and other coins are completely acceptable for you to destroy in any manner you choose for your devious endeavors.

Non-US Coins

Folks, it’s important to remember that each country has its own set of laws.

Therefore, it’s not advisable to assume that you can use coins from other countries in your projects without legal consequences.

In Singapore, they view their money as more than just currency; it’s also their art and culture.

Modifying any of their currency is illegal.

Well, if you’re creating jewelry made of Singaporean coins from a clandestine location within the United States, you likely don’t need to be overly cautious about being watched.

If you get caught doing this in Singapore, you could be fined up to $2,000!

Takeaway:

Folks, just so you know, it’s perfectly legal to melt, form, destroy, or alter US coins, such as pennies.

However, if you’re doing it intending to commit fraud or sell the raw materials of the coins for profit, that’s a different story.

Using coins as materials for projects is completely legal in the United States.

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• Coins That Are Illegal to Own