Blocking Cryptocurrencies and NFTs: Here’s How It’s Possible

While different from each other, the NFT and the Cryptocurrency A certain ability to resist forced execution appears: due to its nature, in fact, in the context of asset seizure, many practical problems are encountered, ranging from determining which assets can be attacked to their actual seizure.

Cryptocurrencies: current rules and upcoming scenarios

Implementation between theoretical doubts and practical difficulties

The legal qualifications of digital currencies and NFTs have long been discussed in the literature, due to their intrinsic nature. Without prejudice to the distinction between tangible and immaterial goods, i.e. those which identify the former as objects of sensory or instrumental perception (think, for example, of a watch or a building) while the latter, like all abstract goods, do not possess their physical (brand, sign, acts of authorship), according to a prevalent hermeneutic line Cryptocurrencies and NFTs belong to the category goods The untouchedwhich can be a subject of rightsEven if they are not given a body of their own. In the absence of regulatory or doctrinal confirmations, it appears that it is this latter interpretation that is supported by majority doctrine, despite the uncertainty of the question..

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Nowadays, from a theoretical point of view, digital currencies such as NFTs are therefore assets subject to foreclosure. This consideration was confirmed, albeit in an abstract way, by a judicial measure within it The judges, while denying the contribution of cryptocurrency to companies due to its factual connectionAnd They considered that they constituted a source of guarantee for public capital. The NFTs or Non-Fungible Code They differ from cryptocurrency tokens primarily in that they are non-fungible, i.e. “digital scarcity” generators. In other words, it is considered unique, non-repeatable and immutable through the use of blockchain technology. For example, anyone who purchases a digital artwork in NFT format will become the owner of the relevant certificate which, in addition to describing its various characteristics, will also consist of its hash The owner of the NFT will be able to formally claim a certain right over the asset.

The problems of applying a lien or any other form of enforced execution to cryptocurrencies are numerous and of a different nature: from a possible exception to the territorial inefficiency of the court brought, derived from the so-called regional, to the subsequent sale or assignment of the crypto-asset. For example, with reference to digital currencies, it is possible to request their allocation by qualifying cryptocurrencies as the “other things” stipulated in Art. 529, paragraph 2 of the Italian Code of Civil Procedure”whose value appears in the stock exchange or market listIn this sense, it is useful to remember that there is no single exchange market, so the rule can only be applied in cases of digital currencies that have received a general list. Below we will analyze some of the main problems that we encountered from a practical point of view.

Deciding which assets to attack: The “empty” crypto wallet dilemma

The first problem encountered in the forced execution procedure on cryptocurrencies is related to the “place” in which they are stored, which are so-called crypto wallets that, contrary to what is generally believed, do not contain the intangible assets themselves, but rather the keys that allow the owner to To order the execution of future transactions. In this sense, a distinction must be made The hardware Come here software Pocket wallet; The former has the advantage of being physically present on devices Dedicated. In other words, it is a storage device (USB pendrive) capable of storage Offline online Various cryptocurrency wallets. On the contrary, when it comes to software portfolio Instead, it refers to a digital tool that can be installed on your computer or smartphone. Having said that, it is now necessary to question whether the subject of the seizure corresponds to the physical wallet, in view of any precautionary measures. On account of disappointment, what is actually required is rather to prevent any evasive action on the part of the debtor. In particular, it is possible to take a precautionary measure of transferring various assets from the debtor’s portfolio to the judicial portfolio. In the absence of a precautionary measure, the debtor can always, through a list of words (the so-called “mnemonic”) Virtually rebuild your account, thus moving your assets to a third wallet, which could seriously lead to termination of executive action due to lack of attackable assets.

Cryptocurrency Ownership: How to Find out if a Debtor Owns Cryptocurrency

The second problem that makes the implementation more complex is The difficulty of knowing if the debtor actually owns a certain amount of cryptocurrency.

In general, there are three possibilities:

  • In a completely informal way (for example, it becomes known, even indirectly, that the debtor owns or accepts cryptocurrencies as a means of payment) or by virtue of a specific contractual relationship;
  • through a Searching for assets to be confiscated electronically According to Article 492 bis of the Code of Civil Procedure: by accessing the tax register, it will therefore be possible to identify any professional activity that the debtor has in the reference sector; In response to the appeal of November 24, 2021, the Revenue Agency has in fact confirmed, within certain limits established by law, that digital currencies are taxable for income tax purposes;
  • Thanks to the decree of the Ministry of Economy and Finance of January 13, 2022, which imposes particularly strict limiting obligations on all subjects that provide services related to the virtual wallet and related to the use of virtual currency; Among these, the following are mainly mentioned: (1) the obligation to register in the special section of the OAM register (Organismo Agenti e Mediatori) so that the activity can be carried out legally in the Italian territory; and (ii) the obligation to periodically transmit both personal data of customers and completed operations to OAM. If so, it is also convenient to check whether individual suppliers have Obligation to cooperate with the judiciary.

Defensive strategy and possible solutions to the problem

Depending on the problem encountered in the specific case, three different cases can be configured based on the defensive strategy chosen in light of the subject of the foreclosure; So you can continue:

  • tospecific implementation demand the delivery or release of the asset if the asset attacked by the creditor corresponds to the assets already owed by the debtor;
  • toImplementation in general if his assets are generally identified and converted into cash until the debt is repaid, after the debtor is insolvent, with the result that there is no coincidence between the related asset and the asset acquired;
  • toExpropriation from third partiesin the event that the debtor is not the direct owner of the asset, but instead uses a third owner exchange) to perform operations.

The latter case seems to be the one in which it would realistically be possible to arrive at the easiest credit gratification. Indeed, the European and national legislature’s interest in regulating virtual currencies appears to be moving towards the imposition of increasingly stringent limitation obligations.. In this sense, it is reasonable to believe that the same professional operators have all the advantages of finding a reliable platform in terms of, for example, transparency and anti-fraud.

Regarding, then, a possible strategy to be adopted in case of anticipating future execution on crypto-assets, it is possible for example:

  • Before establishing the judgment on the merits, in the presence of requirements established by law, Emergency Action Request Which aims to:
    • A procedure whereby the judge orders the surrender of keys that refer to one or more wallets (non-compliance includes the imposition of a monetary fine); And
    • Forfeiture that must occur by transferring crypto assets to a created wallet Dedicated by the court.
  • after that, Create a judgment on the merits request, as the case may be, payment or provision of extradition and possibly confirmation of the above-mentioned coercive measure.

In the event that it turns out that the debtor is not a lieutenant, this will result in aImpasse. Thus, at the stage of foreclosure, the bailiff will call him to indicate the additional assets that are attachable, and in the case of reservation or false declaration, the crime of willful non-implementation of the judge’s ruling may arise (Article 388 of the Criminal Code)

This latter scenario provides further insights: failure to comply with the order of the chief extradition judge should establish, similar to the remedies provided in the Anglo-Saxon system, a firmer penalty aimed at fulfilling the penalty which could be classified as An obligation that can only be performed by the debtor, i.e. the release of the keys; This, together with the courts setting up formal protocols, standardized practices and, as explained by experts in the sector, organizing concrete simulations of various judicial activities through testnets.

What has just been described can provide food for thought regarding the way forward in the event of forced executions involving cryptocurrencies or crypto assets in general.And, in any case, considering the upcoming development of the regulatory framework for cryptocurrency and NFT, it is recommended that the certain actions and procedures are validated and approved by the legislator.


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