In 2009 when bitcoin began to make headline, it was described as a decentralized currency, but most legal minds claimed that it was not a currency and it was not money. Most governments and regulators concurred.
As time passed and BTC gained international recognition and status, investors, traders, regulators, tax authorities and courts could not determine how to classify digital currency.
It seems that this conundrum still has not been resolved. Courts have declared that digital assets are commodities, while others unable to find what to decide, even though they all believe these are assets and the tax man doesn’t really care as he can collect taxes on any asset that makes profits.
CNBC says that:
“So bitcoin’s a currency, right? Well, yes, it can be used to buy, sell and price goods much like dollars and euros.
A commodity? Come to think of it, it does behave a lot like oil and gold – it can be bought and sold in cash markets or via derivatives such as futures.
What about a security? Many cryptocurrencies are, in a way. They’re issued like stocks in “initial coin offerings” and used to represent shares in online projects.
Isolated Australian Ruling
Late last week a Judge in Australia determined that cryptocurrency is a “Recognized Form of Investment”
Judge Judith Gibson of New South Wales district court in Australia permitted the utilization of a cryptocurrency exchange account as a security against the legal expenditure.
TWJ News explained “During an on-going defamation case, the defendant placed a request in front of the district court, stating that the accused party should place a sum of $20,000 AUD in a court-controlled bank account. Should the plaintiff lose the case or facilitate a withdrawal, the funds will be used to cover some of the legal costs of the defendant”.
“The court in Australia accepted the proposal but allowed the plaintiff to store the capital in a cryptocurrency exchange account that would be used as collateral in the event of the plaintiff losing the lawsuit.
Is It Viewed As A Commodity
Legal Representatives from the defendant’s side raised concerns regarding this situation as even though the account was by Australian dollars, the money was represented by a highly volatile form of asset. In response to this statement, Judge Gibson accepted that fact that digital assets were unstable”
This case and the ruling is very isolated and really does not address the overall issue outside of this deposit with the court.
Although crypto/online new services are blowing this out of proportion through social media circles.