Crypto here, crypto there and crypto everywhere!
Is cryptocurrency a real currency or a commodity? Given the fact that crypto is a new phenomenon. The laws around it are a pretty hazy. This is exactly why it is uncertain how the crypto should be treated related to insolvency cases. But, what does one do when you go bankrupt?
Truth be told, we’re confused as hell!
U.S District Court
Guess what people? The U.S District Court of East Taxes have given their verdict. They have ruled out Bitcoin to be a proper currency and it should be treated as a type of money.
You see, there are so many businesses that have started to accept cryptocurrencies as a form of payment. This is exactly why cryptocurrency is more of a currency than a commodity. Doesn’t it make more sense now?
Bankruptcy Experts Need To Up Their Game
Now if bankruptcy experts still choose to ignore the importance of cryptocurrency. Then it’s their lost. It’s a necessity now! With time they are going to be more and more cases related to bankruptcy and the knowledge of these experts will be required.
Although, Bitcoin still hangs in the middle between being a commodity and a currency. More than 100,000 BTC transactions take place every freaking day. Can you imagine? While the people think Bitcoin is one and the same with cryptos, there are actually 900 and more cryptos that exist today.
An Asset of the Debtor
There are so many renowned business such as Subway, Paypal, Expedia, Microsoft and Shopify that accept Bitcoin as a mode of payment. It’s obvious that the mainstream use of Bitcoin is increasing rapidly and no one can stop it. It’s exactly why in the future it will be considered to be an asset of the debtor in cases related to bankruptcy.
This is specifically true for companies that are keen on stockpiling Bitcoin. So, in a case where a company files for
This is especially true for companies that stockpile Bitcoin. If a company with many Bitcoin files for bankruptcy. All the crypto assets will undoubtedly be evaluated for the insolvency case. As more and more companies have started to accept Bitcoin it has become necessary for the financial and legal experts to understand and have a solid grasp about the nature of this asset, and how the court should be treating and dealing with for insolvency cases.
While the general public might consider cryptocurrencies as currencies, some judgments favor the notion that crypto is inherently a commodity. It is unclear how the this will be classified and sorted. But, as the cryptocurrencies gain popularity rapidly. Courts will have to figure out how cryptocurrencies should be classified.
As we all can see, cryptocurrencies have clearly outpaced the law. The regulatory reaction and response is fragmented and incomplete. The US code needs immediate amendment to provide proper guidance on these matters. The truth is, crypto is popular more than ever. If the authorities are waiting for cryptocurrencies to go in an abyss with time. Then they are in for a surprise because crypto is here to stay!