The court recognized the cryptocurrency as property

This week, the ruling of the Court of Appeal was published, which, without exaggeration, the entire legal community was waiting for.
This event became so significant because for the first time in the history of the Russian legal system, a digital asset, which has not yet found a place in the current legislation, was legally assigned the status of property.

Let us recall the history of this issue.

In relation to the debtor – an individual, a procedure for the sale of property of a citizen was introduced and a financial manager was approved.

During the bankruptcy proceedings, financial managers identified a crypto wallet, access to which was not provided by the debtor.

Seeking to include the contents of the crypto-wallet in the bankruptcy estate, the financial manager filed a corresponding claim with the arbitration court.

The court of first instance denied the stated requirements, citing as justification the official positions of the Bank of Russia and Rosfinmonitoring, which did not allow the circulation of cryptocurrency.

However, the court of appeal, having considered the manager’s complaint against the earlier decision, pointed to the admissibility of qualifying cryptocurrency as other property in relation to Art. 128 of the Civil Code of the Russian Federation.

It is especially worth noting that the court, as a justification for its decision, quite reasonably took into account the draft law “On Amendments to Parts One, Two and Four of the Civil Code of the Russian Federation”, which provides for the definition of the basic concept of “Digital Law”, which is under consideration.

It should be noted here that almost in parallel with the adoption of the decision by the Court of Appeal, the State Duma in the first reading supported the bill “On Digital Financial Assets”, which introduces the concepts of cryptocurrencies and tokens. The bill proposes to regulate relations arising from the creation, issue, storage and circulation of digital financial assets, as well as the exercise of rights and obligations under smart contracts.

Thus, the decision of the second instance was taken in the wake of the digitalization of the Russian economy and the legalization of this type of property, and takes into account the practice of development in the field of cryptocurrency regulation not only of the national, but also of the global legal system.

We believe that in the near future we should expect an increase in the practice of applying by courts and state bodies as a justification for Art. 128 of the Civil Code of the Russian Federation to account for transactions with such a type of assets as cryptocurrency in civil circulation, and the decision of the arbitration court under consideration will become the guiding star on which a guideline will be made until the adoption of special legislation in this area.