The Commercial Court of Nanterre in France has issued a ruling recognizing Bitcoin (BTC) as currency — a development that could have significant implications for the country’s cryptocurrency market. Recently, financial regulators in Germany classified cryptos as financial instruments, further enhancing the growing legalization of virtual currency assets.
Outside Europe, both South Korea and India have seen landmark legal and parliamentary actions related to cryptocurrencies. India’s Supreme Court struck out the central bank’s 2018 ban on commercial banks servicing crypto exchanges while South Korea’s parliament passed an amended bill legalizing crypto trading.
Commercial Court of Nanterre Recognizes Bitcoin as Currency
In a ruling issued back in February 2020, the Commercial Court of Nanterre declared Bitcoin to be a fungible intangible asset, no different from fiat, hence, a currency. The court’s decision forms the first legal basis for the classification of cryptos as currency in France.
Commenting on the decision, Hubert de Vauplane of Kramer Levin law firm told Les Echos:
“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.”
The court’s ruling came during a case between Paymium — a French crypto exchange platform, and English investment firm BitSpread. In 2014, BitSpread secured a 1,000 BTC loan from Paymium.
With the 2017 hard fork that resulted in the creation of Bitcoin Cash (BCH), BTC owners received BCH in a 1-to1 ratio. Paymium argued that the 1,000 BCH received should be returned.
By recognizing Bitcoin as legal money, the court classified the loan as a “consumer loan.” According to French law, ownership of the loaned property during the term of the loan resides with the borrower. Thus, the decision sees BitSpread claiming ownership of the 1,000 BCH.
The ruling comes at a time when the country’s central bank is looking towards creating a sovereign digital currency. As previously reported by Blockonomi, France’s apex bank plans to conduct trials for a central bank digital currency (CBDC) in 2020.
French authorities were among one of the early opponents of Facebook’s proposed Libra digital payments project. Other EU nations like Germany have also called on the European Central Bank (ECB) to create a CBDC for the region as a countermeasure to private cryptos like Libra.
Crypto’s Improving Legal Status Across the Globe
News of the French court’s ruling has come at a time when several nations are passing laws entrenching the legal status of Bitcoin and cryptocurrencies. The Indian Supreme Court recently nullified the ban by the Reserve Bank of India (RBI) prohibiting commercial banks from offering services to crypto trading platforms.
With the ban revoked, crypto exchange services in the country are reintroducing direct INR deposits and withdrawals. The RBI has, however, declared its intention to appeal the judgment as the bank has reportedly been behind the push to completely ban cryptos in the country.
Back in 2019, an inter-ministerial committee recommended a blanket ban on cryptocurrencies with additional fines and prison sentences for people found to be engaging in virtual currency transactions.
In South Korea, the country’s parliament legalized crypto trading with platforms now having to comply with strict real-name verification requirements. South Korea’s President will sign the bill into law next year with businesses having an additional six-month grace period to ensure total compliance with the new regulatory paradigm.
The new law while legalizing crypto trading may do little to improve the fortunes of small and medium-sized cryptocurrency businesses in South Korea. Given the increasing compliance costs associated with the new provisions, smaller volume exchanges may face bankruptcy.