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Whether it's NFT IP rights, classifying cryptocurrencies as an asset class, or even determining jurisdictions for trialling cases, Web3 is proving to be a legal minefield for authorities.
The latest conundrum to arise is a fundamentally basic but crucially complex one: should cryptocurrencies even be regarded as money?
In a recent case involving blockchain firm Algorand, a Singapore judge concluded no.
Algorand had attempted to recover their 53.5 million USDC from the now-defunct 3AC. The firm argued that the USDC is equal to $53.5 million as UDSC is pegged to the US dollar.
Daniel Chan of law firm WongPartnership, representing Algorand, said that Singapore recognises foreign currencies as money despite them not being legal tender in the city-state, so crypto should be considered in the same regard.
Read more: Algorand Sets Sights on India With Plan for Web3 Development
Justice Coomaraswamy rebutted that even "seashells were a form of money at one time in history" and rejected Chan's premise.
“I mean, what if you had a (community) in the world that used seashells as its internal medium of exchange? Would the Singapore courts have to recognise that as money?” Coomaraswamy questioned.
The judge highlighted that crypto is yet to be recognised as money in Singapore and that any form of indebtedness must be in fiat.
Read more: NFTs Are Property: Lawyer Weighs In on Singapore High Court Ruling
“Determining whether or not a particular intangible, such as cryptocurrency, is money would require a detailed examination of evidence which is not appropriate in the context of insolvency,” Coomaraswamy said.
Wider implications
Cryptocurrency straddles the line between an alternate asset class and a monetary currency for exchange. Its underlying definition will impact its underlying value.
As Algorand found out the hard way, Singapore is not yet ready to regard cryptocurrency as money, meaning debts incurred by fallen crypto exchanges do not carry the same legal weight as traditional institutions.
Investors looking to park their money in crypto will have to consider that their funds are not as secure as fiat in this regard, which could be detrimental to the sustainability of crypto's future.
With countless insolvencies impacting the crypto market, industry court cases are on the rise. Zipmex, Hodlnaut, 3AC, Babel Finance and Vauld all have legal procedures in Singapore. Their outcomes could also have wider implications for industry standards and the market as a whole.
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