International Insolvency Law and Cryptocurrencies

Abstract

That the legal nature of cryptocurrencies does not fit into a comprehensive definition is already known. On the one hand, EU case law, albeit for tax purposes, has categorised bitcoin as a means of payment (European Court of Justice, judgment of 22 October 2015, C. 264/14). On the other hand, the highest European banking authority, with the opinion of 12 October 2016, reiterated that “virtual currencies do not qualify as currencies”. These latter words stand up in defence of that State’s patent, theorised by Georg Simmel (in Philosophy of money), concerning the monopoly right to coin money. Yet, this antinomic contradiction is only illusory, as with Directive 843/2018/EU, the European legislator restated that virtual currencies are: a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically. On the basis of these considerations, in the first part of this chapter the authors try to outline the current legal framework of cryptocurrencies with regard to their qualification as property. This contribution also focuses on the analysis of the recent proposal of a Regulation of the European Parliament and of the Council, on Markets in Crypto-assets, and amending Directive (EU) 2019/1937. This legislative draft is part of the Digital Finance package (made up of 4 draft laws), with the aim of “ensuring that the EU embraces the digital revolution and drives it with innovative European firms in the lead, making the benefits of digital finance available to European consumers and businesses”. The Commission therefore goes beyond the wait-and-see approach, aiming at uniformisation of the discipline inherent to crypto assets at a supranational level. In this context, the second part of this chapter tackles the issue of the solvency of a debtor with digital assets from a European transnational perspective, especially in light of the discipline laid down by EU Regulation 848/2015. Specifically, it relates how the legal qualification of digital assets, especially concerning cryptocurrencies, will affect the claim of virtual assets owners against the insolvency estate. This analysis then focuses on the debated matters of the insolvency of cryptocurrency exchange platforms and e-wallet service providers (applicable law, jurisdiction, recoverable assets), also relating to insolvency proceedings case-law. The authors thus attempt to relate the issues concerning insolvency, ordinarily connected to the application of national law, with the Blockchain and its decentralisation.