Blockchains, Smart Contracts, Decentralised Autonomous Organisations and the Law
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Blockchains, Smart Contracts, Decentralised Autonomous Organisations and the Law

Edited by Daniel Kraus, Thierry Obrist and Olivier Hari

The growth of Blockchain technology presents a number of legal questions for lawyers, regulators and industry participants alike. Primarily, regulators must allow Blockchain technology to develop whilst also ensuring it is not being abused. This book addresses the challenges posed by various applications of Blockchain technology, such as cryptocurrencies, smart contracts and initial coin offerings, across different fields of law. Contributors explore whether the problems posed by Blockchain and its applications can be addressed within the present legal system or whether significant rethinking is required.
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Chapter 7: The protection of the owners of cryptocurrencies, in particular bitcoin: selected aspects of Swiss financial market and insolvency law

Olivier Hari

Abstract

Cryptocurrencies, such as bitcoin, ether or many others, relying on a distributed blockchain system (based on Distributed Ledger Technology, DLT), constitute an important and ever-growing market. The circulation of bitcoin alone currently has an estimated value of USD 115 billion. By way of comparison, the cash in circulation in Switzerland – not to be confused with the monetary aggregates M1, M2 and M3 which are much larger – totals CHF 84.5 billion. EY Switzerland announced that from January 2017 its clients could pay for their audit and advisory services in bitcoin; the town of Zug made a similar announcement recently. Numerous legal questions are raised in relation to the protection of individuals who have acquired cryptocurrency wallets or store them online. The aim of this chapter is to determine the existing protection for cryptocurrency holders (in particular for bitcoin, but in principle the reasoning can be transposed to any type of cryptocurrency based on identical technology) if a key storage supplier goes bankrupt. First, the analysis will focus on the issue of whether a positive cryptocurrency balance constitutes a thing and whether the activity of keeping cryptocurrency wallets is subject to authorisation by the Swiss Financial Market Supervisory Authority (FINMA); the answer to this question will determine the scope of protection for the claimant in insolvency law.

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