A New South Wales (NSW) court, this week, has allowed cryptocurrency to be used as collateral.
As part of a broader defamation claim, the NSW District Court was asked to force a plaintiff to put $20,000 AUD, or about $13,000 USD into a court-controlled bank account. The amount, in question, was to be used for the defendant's legal costs, should the plaintiff lose or withdraw.
In an unexpected move, the court allowed the plaintiff to use his cryptocurrency exchange account instead of the bank account for this.
The defendant’s lawyer, however, raised concerns regarding the instability of the plaintiff's crypto account. In reply, the presiding Judge Judith Gibson said that she was prepared to accept that.
“This is a recognised form of investment,” Judge Gibson responded ahead of the case.
Addressing the volatility issue, she asked the plaintiff to provide monthly statements on the crypto account’s overall value. The defendant would also be alerted, should the value in the crypto account drop below $20,000.
“I can see the desirability of the defendant receiving prompt notification of any drop in the value of the account,” the judge said. “These are uncertain financial times.”