A few days ago a Japanese court ruled that bitcoins lost through Mt. Gox's collapse are not subject to ownership on a relevant case. While there's still some uncertainty surrounding this ruling the reaction that followed is interesting to say the least.
According to The Japan Times the case of a man seeking to receive the bitcoins he kept at Mt. Gox prior to its collapse back was dismissed. The ruling from the Tokyo District Court claimed that cryptocurrency is "not subject to ownership".
Reason behind the uncertainty
The statements the judge in this case made are interesting but quite confusing as well.
The judge implied that the nature of bitcoin wouldn't allow the law to view it in the same way as tangible entities;
The Civil Code envisages proprietorship for tangible entities that occupy space and allow for exclusive control over them.
Furthermore, an example given by the judge hinted that bitcoin transactions between users would require involvement of a third party and for that reason exclusive control over bitcoins isn't possible.
A misunderstanding?
We know that the plaintiff was representing himself in the case. Some bitcoiners have suggested that this could be what allowed the judge to interpret bitcoin's properties in such a way.
But why would this be a misinterpretation? It's simple, bitcoin's nature allows users to use their coins however they like. Any reliance on third parties aside from an internet service provider is completely optional when transacting bitcoins. Knowing that the notion that bitcoin transactions require a third party to be completed is in fact a fallacy. So what could all the fuss be about in that court case?
Richard Howlett – Partner
The possible scenarios
While trying to put the pieces together it's worth taking a look at some major past events surrounding the bankruptcy proceedings of Mt. Gox.
It's widely known that when Mt. Gox stopped sending out withdrawals both bitcoin and cash transactions were due. There was some controversy surrounding the bankruptcy proceedings just because of that. A lot of users were actually going to lose even more money due to the way Mt. Gox was liquidating its remaining funds. Instead of returning proportionate amounts of cash to cash creditors and bitcoins to bitcoin creditors they choose to also convert bitcoins to cash (at rates that were bound to disappoint a lot of people) before completing the procedure.
Based on that, it should be safe to assume that the ruling was very case specific as the judge essentially indicated that Mt. Gox's wasn't obligated to make exceptions and give out bitcoins per request.
Bitcoin and the need of a legal definition
We know that bitcoin on its own can be very independent. Mainly because it doesn't need a government or a banking system to be used for peer to peer monetary transactions. There's a reason it's called the honey badger of money by many.
However, for that honey badger to be part of a growing economy there needs to be some safe ground. For an investor to trust a business involved with cryptocurrency there has to be legal clarity. Investments with bitcoin businesses are nothing but good for bitcoin as they facilitate the growth of the entire cryptocurrency economy while more people become invested into bitcoin adoption. Hence, why lawmakers should do their best to create the necessary legal infrastructure if they want bitcoin businesses to flourish within their economy.
A global arms race?
Shortly after the first revelations about Mt. Gox Back in February 2014 Japanese officials stated that "any bitcoin regulation should be international". While the Japanese were likely the first to make such a suggestion, even from that time it was easy to foresee that something like that was unlikely to happen.
By design, bitcoin wasn't made to be controlled by a single state or law. As in most decentralised networks, controlling individual clients sounds plausible. Enforcing regulations to every single one though is made harder by the amount and spread of worldwide clients. Even with the current adoption of bitcoin, it's most likely that any attempt to regulate it's uses would fail to a big extent. On the other hand, international regulation for bitcoin businesses doesn't sound like something impossible but is still an unlikely scenario for the same reason that "tax heavens" exist.
Moreover, with the fintech industry doing so well the innovation of cryptocurrency is not to be overlook. Bitcoin is steadily becoming a growing part of the success surrounding fintech. Bitcoin is equipped with the ability to bring ease to worldwide monetary transactions. We should expect several regions striving to become the worldwide capitals for bitcoin businesses by creating an environment for their creation and development to be housed in.
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