The physical location of the bitcoins may seem irrelevant from a technical point of view. However, the abovementioned has great importance when we talk from a legal perspective.
It is indisputable that one of the main features of Bitcoin is the decentralization. Also, it is undeniable that this attribute is one of the most important pillars on which Bitcoin operates and it success may depend on that.
Likewise, regarding its regulation, we have previously mentioned that, given that Bitcoin allows everyone to transfer value, it has born regulated.
However, it is nonetheless true that this regulation (almost in Europe), it is not sufficient to comply with its main purpose, given that this regulation was not specifically created for cryptocurrencies. Furthermore, if we take as example Spanish regulation, we should apply the Spanish Civil Code to this cases, which was enacted even before the existence of Internet (in the year 1889).
It is precisely the decentralization of Bitcoin where the lack of a suitable regulation is specially highlighted. In this context, the current regulation does not foresee that something -Bitcoin- may not be linked to any location (and linked to everywhere at the same time).
Up to date, regarding “Internet matters” (anyone who have had the opportunity of reading any ruling related to websites, domains or encryption could notice the ironic intention of the quotation) it was enough to the legislative and judges to determine the server which hold the contents, even if it is located in Mozambique or Kuala Lumpur.
Nevertheless, the legal –and case law- framework has been superseded by the abovementioned decentralization of Bitcoin.
According to the abovementioned, in the following articles of this series of posts –Where is the Bitcoin?– we will disaggregate different examples in which the determination of the location of the bitcoins may have greatest relevance, such as the determination of the applicable jurisdiction in a case related to cryptocurrencies, the issues that may arise in case of seizure of cryptocurrencies.
Also, in Spain there is an obligation declaring the goods located abroad. To this effects, we have not a clear criteria regarding if bitcoins shall be deemed located abroad. So, where is the Bitcoin?
And now it’s the time for the readers. Do you have in mind more examples like that? How do you think the location of the bitcoins should be determined to legal effects? Do you think we need a specific regulation for cryptocurrencies?