Major collaboration between a bank and Bitcoin, Crypto Law blockchain and regulator
Law of
obligations
As Bierens
already established, Article 6: 112 of the Civil Code leaves room to use the
Bitcoin as a means to pay sums of money. This seems to be consistent with the
scope of qualification in Germany. In addition to our only legal tender, the
euro there are various other payment or exchange means which are often limited
by private law in functionality.
Consider, for
example, Airmiles, bartering units, etc. Anyone who 'pays' Airmiles saved via
the supermarket will pay a sum of money by 'debiting' his Airmilie balance as a
claim against the Airmiles issuing institution, probably consisting of the
consortium of participating companies.
In the
Netherlands, the use of the Bitcoin is currently limited in scope. Thuisbezorgd.nl
accepts it as a means of payment of a sum of money. In The Hague, Canada is the
first Dutch Bitcoin ATM, where only Bitcoins can be obtained in exchange for
euros and not vice versa.
Against the write-off
of euros, the pinner receives a barcode which can be scanned, so that Bitcoins
can be obtained via the internet. Entrepreneurs there accept the Bitcoin as
well. However, the use of Bitcoins as a means of payment increases on the
worldwide Internet, as well as in the real world of the United States and
Europe to China, but also in Afghanistan. Investors also recognize this trend.
Not that they are
investing directly in Bitcoins, but large-scale venture capital investments are
now taking place in the United States in Bitcoin and e-cash related start-ups.
Comparison of law
In international
publications it is argued that Bitcoins can be regarded as currency or as
commodity kind goods. Incidentally, one concept excludes the other. If the
Bitcoin is a commodity commodity, it can not be a currency and vice versa. We
will hereafter mention a few publications as inspiration for possible further
research.
According to the
Bitcoin.org website Bitcoin is money, which indicates that it would be currency.
By contrast, the Finnish central bank categorizes Bitcoin as a commodity rather
than a currency. The Japanese government is also tending to that. [26] In
Germany, the Bitcoin has now obtained an official status. In response to
questions from parliamentarian Frank Schaeffler, the Ministry of Finance
replied that Bitcoin is a financial instrument, more specifically as currency
units to be equated with currencies as referred to in the Credit Scheme Act.
This makes
Germany the first country to recognize the digital currency as a financial
instrument. This does not mean that payment can be made anywhere with Bitcoins,
but that assets are recognized in the digital currency and that private parties
are free to agree on it as the current payment method.
In the United
States, Bitcoin has already been classified as a regulatable currency by a
judge, but the American government has not yet commented on the currency. The
state of New York intends to regulate the Bitcoin in the second half of this
year. It is still unclear how this will look like.
The Bitcoin
insurance
Although the
Bitcoin creates many opportunities, such as fast and cheap settlement of
transactions, there are also a number of drawbacks to acquisitions.These
disadvantages apply to consumers, but also to Bitcoin entrepreneurs and bitcoin or crypto insurance.
Bitcoin exchange
platforms can go bankrupt faster due to the absence of supervision than
exchanges that are supervised. They can also be closed for money laundering if
there is criminal involvement whether or not in connection with the anonymity
of the Bitcoin. The position of the Bitcoin in the various worldwide
jurisdictions is also unclear, which causes major price fluctuations when a
government or regulator in a relevant jurisdiction turns over the Bitcoin.
It has also
happened several times that wallets, the digital Bitcoin wallet, are being
cracked due to inadequate IT security. And last but not least, there is no
financial protection under the Deposit Guarantee Scheme or Investor Guarantee
Scheme. This clearly made itself felt in the bankruptcy of Mt. Gox in early 2014.
By increasing the
use of Bitcoins in the real white economy, the legitimate need for users to
hedge 'price risk' of the Bitcoin is growing. In 'customer centric terms' you
could speak of an emerging new customer need. For Dutch banks and insurers this
is an opportunity to be socially useful and to connect with the customer's
experience of the future. Bitcoin can be a harbinger of what is of lasting
value in the future, just like the computer and the internet.
Assuming that
this customer need is increasingly manifested, product development departments
of banks and insurers will be stimulated more to investigate whether they can
meet these needs through a thorough product development process. Depending on
the outcome
As we wrote before, we are inclined to consider the digital coins as foreign-rights property rights, which have the nature of commodities. Based on this, it is legally possible to enter into derivative transactions with regard to Bitcoins, as well as with respect to other currencies or commodities.
These
transactions can be used to hedge risks, for example by taking an option on the
purchase or sale of Bitcoins at a predetermined price, in which any price
increase or price decrease is discounted. Or by exchanging Bitcoins against
euro or US Dollar and the like.
There are in
particular several parties active in the United States that already offer such
derivatives. Initially, this was only done by niche players who were
specifically targeting Bitcoins, such as the derivatives trader ICBIT. For
example, ICBIT offers all sorts of futures whereby Bitcoins are traded against
Dollars Euro Yuan or oil. Recently more traditional derivatives parties have
also started using derivatives in Bitcoins.
For example, at
the end of March TeraExchange announced that it would offer Bitcoin swaps. TeraExchange
is supervised by the US Commodities Futures Trading Commission.
In addition to
derivatives in which Bitcoins are directly involved, it is also possible to
trade in derivatives in which only the price of the Bitcoin is used. That price
is then determined on the basis of a few Bitcoin exchanges.
The advantage of
this type of derivatives is that they can be used without the parties having to
transfer to the Bitcoins. They are only a hedge against the relevant price
risks. Examples of such derivatives are contracts for difference. Such
derivatives are also offered in the Netherlands by the derivatives traders Plus500
and Avatrade.
Here and there it
is claimed that credit default swaps can also be entered into with respect to
Bitcoins. We can not put that right. A Bitcoin is not a bond-like product, on
the basis of which there is a debtor who has to pay an amount. The holder of a
Bitcoin therefore has no claim. In the absence of a claim, there can also be no
shortcoming in the fulfillment thereof, so that a credit default swap can not
have a function.
For example a
receivable from Bitcoins may play against the parties where Bitcoin holders
hold credits in Bitcoins. Due to the bankruptcy of Mt. Gox has shown that these
claims are not necessarily guaranteed.
It would be
conceivable that credit default swaps with regard to the Bitcoin obligations of
such parties would be closed, although in our opinion it is not obvious.
Supervision
The Netherlands
Authority for the Financial Markets and De Nederlandsche Bank have indicated
that they do not monitor Bitcoin because virtual currencies fall outside the
scope of the Financial Supervision Act.
Development of the Bitcoin
However, both
regulators closely monitor the development of the Bitcoin. Minister
Dijsselbloem had also previously stated in reply to parliamentary questions
that the use of Bitcoin is not subject to any form of government financial
supervision.
In politics, on
the other hand, there are voices to tighten the financial supervision of new
digital currencies, such as Bitcoin. In particular, to stop the use by
criminals.
Should the
Bitcoin insurance come on the market, then there is an 'insurance' as referred
to in art. 1:1 and the provider is an insurer that falls under the supervision
regime of the Wft. But also the (previously) controlled monitoring of the
Bitcoin results from the aforementioned supply of derivatives by Plus500 and
Avatrade.
Developments are
also taking place in Germany, as a result of which the Bitcoin is under
supervision. The German Fidor Bank has entered into a partnership with the
Bitcoin platform Bitcoin.de. With this collaboration, customers of the bank are
given the opportunity to buy the virtual money via their payment account.
Major collaboration between a bank and a Bitcoin
The collaboration
is seen as the first major collaboration between a bank and a Bitcoin platform
in Europe. However, approval from the regulator is still required. This
cooperation with Fidor Bank is important for the Bitcoin platform Bitcoin.de. As
a result, the virtual currency is increasingly given a serious status. In this
way, bitcoin.de hopes to grow into an EU-regulated trading platform that
complies with the rules of the financial markets.
When the
cooperation is complete, the approximately 70,000 customers of Bitcoin.de will
also be protected by the supervision that is in force on the financial market.
Given the international nature of the Bitcoin, it is more logical for the Bitcoin to come under international supervision. Or at least European supervision. To this end, the French Minister of Finance Pierre Moscovici recently called on European supervisors to cooperate in regulating the virtual currency bitcoin. He wants a consultation with all EU member states for this.
In this article
we conclude that the digital coins, the Bitcoins, are individualisable pieces
of software that have been assigned or transferred to someone according to the
software program and to which value is assigned in society. As indicated, these
are not claim rights. In our view they could be regarded as a property right
under foreign law. After all, on the basis of the software program, pieces of
software that belong to persons are transferable according to the same program
and which are intended to provide the beneficiary material benefit or have been
obtained in exchange for material benefit. Like the fei, the value is as high
or as low as the reputation it deserves. In our opinion Bitcoins can also be
used to settle monetary debts, provided parties agree. Dutch private law does
not oppose this.
For insurers and
banks it is to be welcomed from the social role to positively influence the
development of virtual money. To this end, we provide an incentive for the
development of Bitcoin insurance in this article. This reduces the risks
associated with the anonymity of the Bitcoins owners because insurers and banks
apply their CDD policy. This also creates an indirect form of supervision by
the institutions that supervise the insurer.
Conclusion
We see the
Bitcoin as a forerunner of what is of lasting value in the future. It is an
open-source software program, set up under license to the model of MIT. In
short, this means that everyone is free to use the software, to copy it and to
adjust it at its own discretion, while the author of the software accepts no
liability.
Despite the
considerable economic value, the legal qualification of the Bitcoin is causing
headaches in many countries with all its consequences, such as lack of legal
protection for the consumer and lack of supervision.
No comments: