Bitcoin has brought solutions to persistent problems on the road to attempts to invent digital money, such as spending risk. However, some of its features have created some challenges for traditional legal and financial systems, such as the characteristic irreversibility of blockchain transactions. Sometimes they may seem incompatible with cryptocurrencies, but this is not always the case.
Matthias Lehmann, director of the International Private and Comparative Law Institute of the University of Bonn, explores some of the challenges that decentralized digital currencies have brought to existing legal systems and suggests solutions in a recent article. However, as is often the case, instead of focusing on transfers from fraud, the German professor points out “less reported” but equally possible actions.
Lehmann emphasizes two sets of problems: the blockchain when the "sender" is caused by erroneous transmissions and "external" problems, other than the need for correction, with the sender making mistakes or not having the legal capacity to transmit. The second category includes, for example, bankruptcy transactions or the succession of crypto assets. Distributed ledger technology (DLT) is designed to prohibit double spending, but it cannot reverse faulty transfers and does not allow the transfer of a title outside the blockchain.
Legal experts say these are common problems and are pretty standard in private law. However, applying ordinary private law rules is not an option in the case of cryptocurrencies. This is due to the irreversibility of blockchain transactions on the one hand and the difficulties in establishing the administrative law on the other. Professor Lehmann proposes a workaround instead of defending the easy way by rejecting things that do not meet current assumptions.
Under these circumstances, private law may be introduced to the concept of "obligation to make transfers" to fulfill its corrective function. The author also explains: “For example, someone who buys a certain amount of Bitcoin may have to send the same amount back. A transfer obligation may also be the solution to the option to enforce the rights of a bankruptcy manager or heir of a property. In case of a mandatory transfer, other existing laws may be applied to unauthorized networks, such as torture law. law of refunding the return of encrypted assets that were sent by mistake.
Matthias Lehmann thinks that the validity of blockchain transfer should not be evaluated using normal proprietary law concepts, and insists that transfer obligations do the job when a correction is required. Thus, an overly ambitious role of laws that can make DLT inefficient and consequently impossible can be prevented. The proposed solution corrects the results of a transaction using "DLT's forms and procedures only to the extent necessary," and eliminates the need to establish a national law governing blockchain by distributing the applicable chains among various affected legal systems. . "
Decentralized digital currencies are criticized by the institution for their volatility, which, according to the disabled of the fiat system, makes them inconvenient for a number of applications that require a stable calculator. A rapid and sometimes significant change in market prices makes it difficult to accurately measure the value of items priced in the cryptocurrency; For example, although there are products and services that already bridge the dominance between young, free crypto markets and traditional markets; by centrally managed fiat systems.
One of the features of the crypto space that distinguishes it from the traditional financial world is that bitcoin does not have a fixed exchange rate against other currencies, as determined by the central banks for fiat currencies. However, such a reference figure may sometimes be necessary, for example, in court cases involving financial relationships or when estimating a tax liability to keep someone in a different currency than the national fiat.
The Russian Cryptoindustry and Blockchain Association and the Russian Bar Association have recently proposed a solution. The two organizations have developed a formula that determines the “official”, so to speak, exchange rate of the cryptocurrency. Price data from various digital asset exchanges every 30 seconds will be used to calculate a daily weighted average and the result will be published every 24 hours. By taking this value as a reference, reference exchange rates against the US dollar and the Russian Ruble can also be determined and used in accounting.
