What Are The Possibilities of Blockchain and Crypto Assets?

Blockchain And Crypto Assets

Blockchain and crypto assets have become an integral part of our digital economy. Utilizing the blockchain's distributed ledger, we have a technology that enables secure transactions, even between parties that do not know and do not trust each other. Trusted third parties such as banks or civil-law notaries have become superfluous.

 

Blockchain also provides excellent opportunities in terms of security and automation. Bitcoin is the best-known implementation on the blockchain as a virtual currency or cryptocurrency. We are also familiar with other crypto assets, such as Monero, Stablecoins, CBDCs, Privacy coins, governance tokens, utility tokens, and NFTs. In this Article see the possibilities of crypto assets and blockchain, and we keep a close eye on developments.

 

Blockchain And Crypto Legislation

 

Legislation is often not present, or only to a limited extent. Therefore, many parties involved in blockchain or crypto assets seek help setting up structures for companies or organizations in the tokenization of capital or wonder whether they need registration or license.

 

Exchange services and providers of custodial wallets may be subject to specific regulations, such as anti-money laundering legislation. 

 

Legal Qualification of Crypto Assets

 

How crypto-assets are legally qualified is of great importance in determining whether, and if so, how they can be transferred, encumbered, seized, or executed. Under contract law, the bitcoin system ("Bitcoin" instead of bitcoins) can be seen as an – implicit – multi-party agreement, the content of which is determined by the technology. It is likely that this also applies to other crypto assets.

 

From a property law perspective, bitcoins can be seen as a piece of software to which the MIT open source license applies. Others think that bitcoin resembles a 'thing' or an absolute 'property right.'

 

We have argued in the literature that bitcoins are a relative property right. The case law is not unambiguous. For example, bitcoins are regarded as a medium of exchange and ether as a good. On the other hand, bitcoins are considered to have characteristics of a property right. This qualification means that a claim for bitcoin payment in bankruptcy is eligible for verification.

 

Many people think differently about this; for example, it is argued that bitcoins are incorporeal goods. In Some Countries, the transfer of bitcoins takes place exclusively under contract law. In some countries, legislation is reportedly preparing to give cryptocurrencies property law status.

 

Another approach is to equate not so much the cryptocurrency itself but the carrier of cryptocurrencies (in which claims are embodied) with securities (bearer paper). But, so many wallets and so many crypto assets, so many approaches. The last egg has not yet been laid.

 

KYC For Crypto Wallets And Exchanges

 

Apart from the qualification of cryptocurrencies, some concrete laws and regulations can apply to cryptocurrencies. For example, anonymous transactions on crypto exchanges are prohibited under anti-money laundering rules.

 

Crypto wallets are also required to have a KYC ("Know your customer") policy. Because personal data is processed and many other anti-money laundering obligations may also apply.

 

Additional obligations also apply in some countries, such as a mandatory license from the local authorities and internal supervisory obligations. In addition, it may be mandatory to draw up a prospectus.