A dispute in France has led to a landmark court decision. The decision of the Nanterre Commercial Court contained extensive case law, which also determined the legal nature of Bitcoin.
The court considers Bitcoin in this case to be a fungible intangible asset. Just like paper money, Bitcoin legally represents an asset that is exchangeable but not individualizable. This is a landmark decision which should facilitate Bitcoin transactions in the future due to new legal certainty in France.
Dispute over Bitcoin credit security led to the decision
According to a report by Les Echos, a dispute between the French stock exchange platform Paymium and the British alternative investment company BitSpread led to fundamental case law. Paymium had deposited 1000 Bitcoins with Bitspread in 2014 as collateral in exchange for a loan. During this time, the hard fork of Bitcoin took place, which led to another crypto-currency with the current name Bitcoin Cash. As a result of the fork, all Bitcoin owners received Bitcoin Cash Coins at a ratio of 1:1, which led to a dispute over who was entitled to the newly created Bitcoin Cash Coins.
The court decided, analogous to Lombard loans in the traditional financial world, that the new coins were due to the debtor, comparable to a dividend. From now on, loan agreements are likely to contain a clause for cases of a “fork” in order to record the question of ownership of rights between debtors and creditors in such events.
Extensive case law leads to currency Definition of Bitcoin
In this case, the Court considers Bitcoin to be a fungible intangible asset which is interchangeable but not individualisable, similar to the characteristics of fiat money.
“This decision is significant because it allows Bitcoin to be treated as a currency or financial instrument. It will therefore facilitate transactions with Bitcoin, such as credit or repo transactions, and thus promote liquidity in the crypto-currency market” – Hubert de Vauplane, lawyer at Kramer & Levin.
Legal certainty in South Korea
In South Korea, too, an amendment passed by the parliament this week created further legal certainty in dealing with crypto-currencies. In this context, crypto tokens, and other virtual currencies, are to be formally classified as digital assets. This will fully integrate the handling of crypto-currencies into the legal system.