French Court rules bitcoin is currency according to a report by Les Echos. This may help push the definition of cryptocurrency towards some logical end. There is a major problem of defining cryptocurrencies because some define it as currency or money, others as securities and some others as utility. The problem of regulation stems from the fact that a legal definition has not been universally accepted. The recent case between Ripple and the SEC is proof of that fact.
Court decisions concerning cryptocurrencies are so rare that they deserve attention in a universe in the process of regulation. But the decision of the Commercial Court of Nanterre, dated February 26, and revealed by “L’Agefi”, will be a date for two reasons: it is a first in France, especially since it comes out of case law usual. Above all, it allows to qualify the legal nature of bitcoin, the most famous and ancient cryptocurrency.
Indeed, the court considers bitcoin as a fungible intangible asset, which is legally “gender”, that is to say an interchangeable good, but not individualizable, just like fiat money.
“The scope of this decision is considerable because it allows bitcoin to be treated like money or other financial instruments. It will therefore facilitate bitcoin transactions, such as lending or repo transactions, which are growing, and thus favor the liquidity of the cryptocurrency market, “says Hubert de Vauplane, lawyer specializing in Kramer & Levin.
This decision was taken in the context of a dispute between the French exchange platform Paymium and the English alternative investment company BitSpread. In summary, Paymium loaned 1,000 bitcoins to BitSpread in 2014, before the hard fork of bitcoin in 2017, creating a new cryptocurrency, bitcoin Cash, at a one-for-one parity. The reason for the dispute raised the question of the return to the lender, or not, of the bitcoins Cash resulting from the split.
Legal nature of bitcoin
To answer this question, the Tribunal therefore considered the legal nature of bitcoin. The Covenant law has above all given a status to cryptocurrency players, content with a generic definition of these new digital currencies. Once judges have considered bitcoin as a fungible asset, that is, as money, bitcoin lending falls under the “consumer loan” (not to be confused with consumer credit), which transfers ownership property loaned to the borrower during the term of the loan. And so, the bitcoins Cash belong to the borrower, like the dividend to the shareholder, considers the Court.
The fork in all loan contracts
Some cryptocurrency players do not share this analysis and consider the fork more as a destruction of value. “This pale copy of the original has undoubtedly weighed on the price of bitcoin,” said a professional. Today, bitcoin is worth more than 8,100 euros and bitcoin Cash 305 euros. Only one certainty: now all loan contracts will be accompanied by a return clause to the lender in the event of a fork. The question of the possession of rights between debtors and creditors before and after the split undoubtedly promises great legal battles.
French Court rules bitcoin is currency and brings crypto closer to a legal framework.