On February 26th, the Commercial Court of Nanterre in France decided that Bitcoin is a fungible interchangeable asset that is not individualizable, just like fiat money.
The ruling was part of a dispute between a French cryptocurrency exchange and an alternative asset investment management firm. According to the court documents, the exchange loaned 1,000 Bitcoin to the investment firm in 2014. During the term of the loan, the Bitcoin / Bitcoin Cash fork had occurred, giving the investment firm a substantial amount of Bitcoin Cash. The dispute was focused on who held the legal rights to the Bitcoin Cash.
To come to a resolution, the courts had to take a specific look at the the legal nature of Bitcoin. Once the French court identified Bitcoin as a fungible asset, they went on to state that Bitcoin lending was to be viewed as a consumer loan. Particularly in France, this type of loan transfers ownership of the property to the borrower during the term of the loan. Taking all this into account, the court found that the Bitcoin Cash belonged to the borrower just like dividends belong to shareholders in traditional markets.
Hubert de Vauplane, a partner at the law firm of Kramer & Levin, stated that this ruling could be very positive for the ecosystem and that “the scope of this decision is considerable because it allows bitcoin to be treated like money or other financial instruments. It will therefore facilitate bitcoin transactions, such as lending or repo transactions, which are growing, and thus favor the liquidity of the cryptocurrency market.”