In what is being perceived as a landmark judgment, a Russian court has ruled in favor of a petitioner who asked the judge to include the bitcoins held by a bankrupt person in the debtor’s bankruptcy estate.
Significantly, the judgment classifies Bitcoin as a “valuable property,” a strong sign towards the recognition of the virtual asset in Russia.
The origins of this dispute traced back to a claim filed to the Ninth Arbitration Court of Appeals by the bankruptcy trustee Alexei Leonov in October 2017. A lower court had initially directed the bankrupt Ilya Tsarkov to disclose the contents of his Blockchain.info wallet as part of the real estate estimation process.
But at the time, the court rejected the lawyer’s request to involve the bitcoins into the repayment process, citing the absence of practice in selling cryptocurrencies.
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Following the failure of Tsarkov to pay the required debt ($285,000) in ordinary assets, the appeal court has overturned the previous judgment and ordered Tsarkov to transfer the digital currency as a valid and legitimate property.
“The court indirectly recognized the cryptocurrency as property and recognized its value,” local media quotes Leonov as saying.
While Russian legislation does not provide a final definition of cryptocurrency, this ruling sets a precedent which recognizes the potential use of digital assets in contractual agreements. The final passing of this judgment would mean that Bitcoin shows all the characteristics of a property right.
Russian politicians repeatedly confirmed that it is necessary to draft laws and expand regulatory jurisdiction in this dynamically developing field, while industry participants are concerned about the unwarranted interference of law enforcement authorities in business activities involving the use of blockchain technology.
The latest draft law defines cryptocurrencies as “another property of a special kind.” However, it does not yet describe the rules of taxation or mining activities, which can be considered as “an entrepreneurial activity.”