“Cryptocurrency” is a term à la page, nowadays. It refers to a currency designed to work virtually only, thanks to a computerized blockchain network; and not to rely on any established State authority, such as central banks.

Crypto comes from the ancient Greek κρυπτός an adjective meaning “secret”, “hidden” (and also “misleading”…). Actually, in talking of currencies the term refers to “cryptography”, which is a way to secure the transmission of information in an encrypted code. That’s what the cryptocurrency system is based on, in fact – a big encrypted public ledger, that assures certainty and safe exchanges (see here on blockchains).

As many know, Bitcoins were the forerunner in the tumultuous cryptocurrency present scenario. They were launched in 2009, soon followed by many others (Ethereum, Litecoin, XRP, Bitshares just to name some of most renowned). At present, they calculate that there are some over 13k cryptocurrencies around[1].

As it usually happens, practice leads soon or later to regulation. As far as the EU is concerned, the first attempt to set a comprehensive normative framework dates back to 2020[2]. Eventually Regulation no. 1114/23 “on markets in crypto-assets” (MiCA) was adopted on May 31, 2013 with the express aim to lay down “uniform requirements for the offer to the public and admission to trading on a trading platform of crypto-assets other than asset-referenced tokens and e-money tokens, of asset-referenced tokens and of e-money tokens, as well as requirements for crypto-asset service providers”.

In this Regulation (to start to apply in general on Dec 30, 2024), ‘crypto-asset’ is defined (art. 3.1(5)) as “a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology”. At present (June 2024), the EU Commission are in the process of adopting the delegate regulations.

However, already in 2018 the following definition of “virtual currencies” was introduced in the EU legislation: “virtual currencies” means a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically[3]

Whatever the ultimate effects of this legislative initiative may be, cryptocurrencies are a vital component of the economy, and have already come under the scrutiny of courts as the matter object of specific operations. A decision adopted in 2018 by the 1st instance court in Brescia (Italy)[4] gives an interesting example on how cryptocurrencies may be utilized by business, and considered under the law.

The question was whether a shareholder may make a capital contribution in cryptocurrency. Following the initial opposition by the public notary charged with the operation, a shareholder claimed in court that there was no reason to deny validity to such a contribution, since the law clearly allows “any asset or utility, as long as it can be evaluated economically and, therefore, there is a concrete possibility of estimating in objective terms the entity contributed” (art. 2464.2 of the Italian civil code), and an expert’s evaluation has been produced, stating the value in contribution, as expressed in euro.

The court, however, held for the negative. In the case at hands, they found, in fact, that the expert’s evaluation was not sufficiently grounded, since the utilized crypto currency (“OneCoin”) was not traded in any market[5]. Therefore, its value was far from being ascertained, or ascertainable.

It is noteworthing that the court held that a cryptocurrency was not held as unusable per se. On the contrary, a contribution in crypto (to considered as an asset-in-kind, susceptible to sworn evaluation) is possible whereas that crypto (i) is currently traded in a market; (ii) is capable of being economically evaluated, and (iii) may possibly be the object of levy in execution.

And its volatility, is not of obstacle (as it was the public notary’s opinion).

The denial was then confirmed in appeal[6], that however followed a totally different approach: according to the Appellate court, in fact, a cryptocurrency should be considered as an equivalent of money, so there is no room for any sworn evaluation. However, unlike other foreign currency (like US dollars, Yen, etc.) cryptos “do not have an exchange system that is stable and easily consulted” so they are to be deemed as radically unusable for a capital contribution.

At the moment (June 2024), the two reported decisions are still the only ones adopted by Italian courts in re matter.

The situation may vary, of course, in other jurisdictions. It results, for instance, that in Switzerland, the Commercial Register Office (HRA) in Zug seems to allow cryptocurrencies to serve as contributions in kind, provided that they are capitalizable, freely transferable, freely available and, of course, the object of an expert appraisal to determine their actual value when conferred. This is the case of Bitcoin, or Ethereum, that may be otherwise utilized in order to pay taxes[7].


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[1] Read this, among others contributions: https://explodingtopics.com/blog/number-of-cryptocurrencies.

[2] EU COMM., Proposal for regulation of Markets in Crypto-assets, and amending Directive (EU) 2019/1937, (COM(2020) 593 of September 24, 2020 adopted as a part of the so called “Digital Finance package”.

[3] Art. 1(2)(d) of EU Directive 2018/843 of May 30, 2018 amending Directive 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

[4] Brescia (IT) 1st Instance court judgement no. 7556 of July 25, 2018.

[5] The OneCoint crypto (now LinkToken) happened to be a digital token issued by the Chinese company Xunlei, intended for paying goods and services made available by the same Xunlei.

[6] Brescia (IT) Court of Appel, decision no. 207 of October 24, 2018.

[7] See https://zg.ch/de/steuern-finanzen/steuern/steuerbezug/steuern-bezahlen-mit-kryptowaehrungen.

<img src="" class="rounded-circle shadow border border-white border-width-4 me-3" width="60" height="60" alt="Carlo Mosca">
Author: Carlo Mosca

A lawyer specializing in international commercial transactions. Lexmill's founding partner.

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