French Court Declares Bitcoin a Currency: Implications for Crypto Loans

Bitcoin: Now Officially a Currency in France

In a groundbreaking decision, a French commerce court in Nanterre has officially classified Bitcoin (BTC) as a fungible asset comparable to traditional currency. The ruling came during a dispute involving the local cryptocurrency exchange Paymium and the investment firm BitSpread.

Understanding the Dispute

The beef began back in 2014 when Paymium loaned 1,000 BTC (that’s over $9 million for those counting) to BitSpread. Fast forward to 2017, during the hard fork which birthed Bitcoin Cash (BCH), and suddenly BitSpread found itself in possession of 1,000 BCH. Now, both parties are haggling over the rights to this newly minted fund, valued at a cool $350,000.

The Court’s Ruling Explained

The court’s ruling addressed the crux of the matter: classifying Bitcoin. By defining it as a fungible asset, the court concluded that Bitcoin lending operates like a consumer loan, meaning the borrower temporarily owns the asset during the loan period. Consequently, it decided that any Bitcoin Cash generated while loaned belongs to the borrower, similar to how dividends work for shareholders.

Wider Impact on the Crypto Loan Sector

This ruling echoes through the crypto lending landscape. As Hubert de Vauplane, a specialist lawyer, noted, this decision can greatly enhance the liquidity of cryptocurrencies by facilitating various transactions like lending and repo transactions.

The Global Perspective on Cryptocurrency Classification

The legal classification of cryptocurrencies is still a hot topic worldwide, with varying definitions popping up across different countries. For example, Japan was a pioneer in recognizing Bitcoin as money back in 2016. The US state of Wyoming followed suit by passing legislation to categorize cryptocurrencies as money. Even a Chinese court formally recognized Bitcoin as digital property. So, while France is stepping up to the crypto plate, it’s clear this is just the beginning of a larger conversation on how we should view digital currencies on a global scale.