Crypto-Currency - Is it Money, and can it be a debt
What is crypto-currency? It is mainly being traded as an investment, and despite fledgling banks/funds dealing in this market and failing, often with the whiff of fraud, there is every prospect that such an amorphous and worldwide currency will become acceptable and more commonplace in our everyday lives, as recently recognised by the Bank of England.
But is it recognised by the law? If you have paid in crypto-currency to a trader e.g. Tesla, and do not get what you want, can you claim your crypto-currency (“money”) back?
Crypto-currency takes many forms e.g. Bitcoin Ethereum and more recently NFT’s.
So, is it “money”? at Common Law, a claim in debt has historically been for a definite sum of money. But does that include what otherwise may be seen as a “commodity”? If so, and in that event, a claim for payment of crypto-currency may only be for non-delivery, and therefore a claim in damages and not for a debt. Money has thus far been issued, regulated and supported by Sovereign states, and traded as such, and recognised as such by the laws of every country (or most).
Can crypto-currency appearing from and within the ether of the internet be “money”?
It can be said that money is not always cash, and can be manifested as “credits” in bank accounts. That said, such credits are still by reference to state-sponsored currency. The difficulty also arises that due to the volatility and lack of liquidity of crypto-currency, and therefore particularly with regard to the value of goods, services and assets, there is a lack of any sensible basis to propound an ascertainable and compensatory debt. However, we have lived in times of currency volatility and uncertainty e.g. the Turkish Lira and Zimbabwe Dollar.
It is inevitable what whilst currently we are not aware of any High Court case law accepting a claim in crypto-currency as a money claim (this potentially would give rise to difficulties in valuing the claim on issue – how do you assess the Court fee – and what would be the value attributed on Judgment?), the day must surely come when some level or standard of crypto-currency will be accepted as at least equivalent to money. Until then, and no doubt beyond, there will remain uncertainty as to the value of crypto-currency in terms of “money” for the purpose of debt collection, let alone the ability and means to enforce a Judgment in such currency.
For the present, perhaps a pro-tem measure may be to include in any relevant contract involving the exchange of crypto-currency, a mechanism to convert any crypto-currency liability into an equivalent money currency for the purpose of any proceedings. However, that may only encourage short-selling…….