Latest Court Ruling Brings Bitcoin’s Legal Status Into Question Again
For quite some time Germany’s principal financial regulatory body, BaFin, had recognized Bitcoin as being a legitimate financial instrument that could be used within the nation for facilitating monetary transactions. However, following a fresh new ruling by a local court, BTC’s legal status has once again been thrust into the spotlight.
As per the ruling, the premier digital asset no longer meets the definition of what a legal tender is (the terms for which have been set forth by the the KWG Banking Act).
The Nitty Gritty of the Case
The case in question dates back to September this year when the Berlin Court of Appeal dismissed a filing against the operator of a local bitcoin trading platform. Initially, German law enforcement agencies had taken the operator into custody for making use of digital assets such as Bitcoin without acquiring the necessary permits from BaFin.
However, following this indictment, a regional court in Berlin reversed the order saying that BaFin misinterpreted the legal status of bitcoin. As a result of this, the 4th Criminal Division of the local magistrate decided to favor the court's ruling, thereby confirming that the German regulatory body had extended the scope of criminal law to bitcoin without synchronizing it with the related banking acts.
Additionally, it is worth noting that the appeal court cited Section 1(11) of the KWG, thereby claiming that neither the nation’s central bank nor any public authority issues bitcoin. This means that the digital currency lacks a stable intrinsic value and hence cannot gain the status of being a ‘legal tender’ (a point that is contrary to the rules laid out by BaFin earlier in May 2018).
European Regulators Need to Make Their Minds Up
As a result of this latest court ruling, the sentiment of many people all through Europe towards crypto has begun to change. This is primarily because no European nation has consistently defined Bitcoin in a fixed way till now. Also worth remembering is that back in 2016, the EU had voted in favor of a motion that allowed crypto holdings to be taxed— thereby deeming them to be legal tender.
However, even this provision has not able settle the ‘definition debate’ regarding what Bitcoin exactly is. Instead, it only created more confusion since no country within the EU has been able to agree on a continent-wide regulatory framework to foster the adoption of digital assets.
In relation to this entire matter, Bitwala Head, Jörg von Minckwitz, said that for countries affiliated with the EU, a uniform legislation regarding Bitcoin is much needed. Not only that, he also added:
“In the past years, Bitwala has repeatedly spoken out in favor of legal clarity and a regulatory level playing field in the EU. As digitization affects society across borders, this can only be done in unison. Currently, every EU country seems to have their interpretation, which results in regulatory arbitrage to the detriment of German consumers and innovators.”
With the latest court ruling now coming into effect, it basically means that BaFin no longer has the authority to penalize individuals trading and holding crypto (unless it joins hands with local legislators to create a provision to modify the KWG). As things stand, Bitcoin as well as all of the other crypto assets available in the European market are still subject to the aforementioned EU regulations.