A Russian arbitration court of appeals has recognized cryptocurrency as a property with value in its ruling on Monday. This overturned a previous ruling by another court even though Russia currently has no legal framework for cryptocurrencies.
Crypto Recognized as Property
The Ninth Arbitration Court of Appeals ruled on Monday that a bankrupt person’s cryptocurrency must be included in the debtor’s bankruptcy estate, local media reported.
The case involves Russian citizen Ilya Tsarkov who filed bankruptcy in October last year. The court has ordered his cryptocurrencies to be transferred to the trustee, Alexei Leonov, who is expected to be handed the private key to the crypto wallet belonging to Tsarkov soon. According to Vedomosti, Tsarkov owns almost 0.2 bitcoin which is worth approximately US$1,885 at current market rates.
“The cryptocurrency was first recognized as property in Russia,” Ris Novosti reported. Leonov commented that with this ruling:
The court indirectly recognized the cryptocurrency as property and recognized its value.
Court Recognizes Crypto
Prior to Monday’s ruling, the case was heard in February by the Moscow Arbitration Court, which ordered Tsarkov to disclose his cryptocurrency holdings after he revealed to the bankruptcy trustee that he had a wallet at Blockchain.info.
Leonov requested the court to order the transfer of Tsarkov’s cryptocurrencies into the bankruptcy estate, but the court rejected his request at the time, stating that cryptocurrency cannot be used to pay creditors since “the laws of the Russian Federation do not recognize cryptocurrency as property.”
However, with Monday’s ruling, the Ninth Arbitration Court of Appeals overturned the judgment of the Moscow Arbitration Court after Leonov appealed. Russian Legal Information Agency Rapsi conveyed the court’s explanation:
Currently Russian legislation does not provide the definition of cryptocurrency and there are no requirements for its circulation. There is no way to tell if it is property, information or a ‘surrogate’…it is impossible to regulate the relations involving cryptocurrency.
Leonov cited “the position of the European Court of Human Rights on the issue of property and a bankruptcy case in Japan, where a court permitted to sell the debtor’s cryptocurrency,” the agency noted. “The lower court should have taken into account modern economic realities and new information technologies…bad-faith parties could exploit the fact that cryptocurrencies were excluded from bankruptcy estates by converting their assets and thus rendering them inaccessible,” he reportedly conveyed.
What do you think of the court’s ruling? Let us know in the comments section below.
Images courtesy of Shutterstock.
Need to calculate your bitcoin holdings? Check our tools section.
Source : Bitcoin