Bitcoin and the larger cryptocurrency world received another shot in the arm recently when a French court ruled that Bitcoin is equivalent to fiat currency. The issue arose during a legal dispute between a French crypto exchange and a British investment company, at the heart of which was the legal definition Bitcoin. In a decision that could have ramifications for the wider crypto community in the country, the Commercial Court of Nanterre ruled that Bitcoin is a fungible intangible asset – the same status afforded to traditional currencies.
Bitcoin Fork Proceeds Cause Legal Strife
The ruling was actually made on February 26 but has only recently come to light through French website Les Echos. The case from which the ruling comes involved Paymium, a French crypto exchange, and BitSpread, a British investment company. In 2014 Paymium took a ₿1,000 loan from BitSpread, at which time neither party could have foreseen that Bitcoin would undergo a hard fork, which of course it did three years later.
This generated 1,000 BCH tokens valued initially at some $276,000, which both sides claimed belonged to them. In order to come to a decision about who legally owned the tokens, the court had to decide on the financial nature of Bitcoin, ruling that in this matter the Bitcoin should be treated like cash.
This meant that the loan fell under the category of “consumer loan” as opposed to consumer credit, meaning that any extra funds resulting from the initial loan could be kept by the borrower, Paymium.
Court Ruling Offers Clarity
The ruling gives clear guidance on how cryptocurrencies, or at least Bitcoin, should be legally viewed moving forward, offering clarity for those who deal with it on a regular basis. Bitcoin’s legal status has been a thorny issue for many countries, with rulings often coming as a result of court cases rather than specific legislation – one famous case in China in 2018 saw a local court rule that the Bitcoin at the center of a civil dispute should be treated as property rather than as a currency.
With cryptocurrency use set to only increase in the coming years, it is likely that a growing number of courts will find themselves having similar decisions to come to regarding Bitcoin’s official status. This will no doubt lead to interesting, and conflicting, views on the subject by jurisdictions in different countries as lawmakers potentially wait for courts to do their jobs for them.