Bitcoin is very similar to real estate transfers in that it covers almost all aspects. The transactional characteristics, such as the Buyer and Seller, the price to be paid as “consideration,” and the endorsements, are strikingly similar. But it’s worth noting that Bitcoins are scarce, and they’re not particularly valuable. However, much like any other real estate transaction, Bitcoin transactions have public records. The Bitcoin Database is a public record that keeps track of all Bitcoin transactions. Anyone with access to a computer can see any Bitcoin transaction, just like when you go to the Registrar’s office to find out about title deeds. However, unlike property, where the government imposes a stamp duty to give credence to the validity of the transfer, there is no governmental monitoring or cooperation with the operations.
Bitcoin As ‘Property’ Or ‘Goods’:-
At the very basic level, what becomes the foundation for Bitcoin are the computer codes, thus, Bitcoin does not exist in physical/tangible form. Hence, the question that pops up is to regulate the Bitcoin transaction, could be deemed to be Movable property under the laws?
It is important to note that the Transfer of Property Act, 1882, is the main statute that governs the property elements. However, while this Act covers characteristics of moveable property, it does not define what constitutes movable property, which is crucial to determine if Bitcoin falls under its scope. The term “movable property” is defined in the General Clauses Act of 1897, and it is taken from there for all purposes. Movable property is defined in Section 3(36) of the Act as:
“Movable property” shall mean property of every description, except immovable property.”
The scope of this term is quite broad, and it includes intangible properties as well. It is important to note that the term “goods” is defined as follows in Section 2(7) of the Sales of Goods Act 1930:
“Goods means every kind of movable property, other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale”.
As a result, Bitcoins might be considered goods because they are transportable property. However, the judiciary has not put much effort into determining whether the intangible property also applies in the virtual sphere.
Tata Consultancy Services v. State of Andhra Pradesh:-
However, in the case of Tata Consultancy Services v. State of Andhra Pradesh, the Hon’ble Supreme Court has opined that –
There is no distinction between tangible and intangible property in Indian law. A ‘goods’ might be either a tangible or intangible asset. It would be considered goods if it exhibited the following characteristics: (a) utility; (b) ability to be purchased and sold; and (c) ability to be transported, transferred, delivered, stored, and possessed. If a piece of software, whether customized or not, fits these criteria, it is considered good.
Given the current legal structure around the intangible property, it is possible to conclude that Bitcoin fits within this category.
American Law For The Property:-
Three tests are mandated in the American legal system for determining the existence of a property right, which are reprinted below:
- There is a specific definition of an interest;
- It is capable of exclusive possession or control; and
- The putative owner has demonstrated a valid claim to exclusivity.
To begin with, the individual who buys Bitcoin has a valid stake in it, and the value of that interest can be assessed in terms of the country’s currency. Second, there is no doubt that the individual who purchases Bitcoins has exclusive control of them. It’s similar to real estate, where a person holding the title deeds can only deal with that property; similarly, there are credentials in Bitcoin. Finally, but certainly not least, a person has a legitimate claim to it because when Bitcoin is transacted, it is recorded in the network’s chain of transactions, which eliminates the possibility of a fraudulent transfer.
Thus, it could be said under that the American Legal System, there is recognition of Bitcoin as intangible property.
Bitcoin As ‘Commodity’:-
When Bitcoins are classified as intangible property, it’s important to determine if they also meet the criteria of a commodity. Similarly, the transportable property, or commodity, is not defined, and there is no legal precedent on the subject. However, according to the dictionary, it refers to “every moveable thing that is purchased and sold (excluding animals), a commodity of trade, and a movable article of value or something that provides ease or advantage, especially in commerce.”
In the matter of Tata Consultancy (Supra), Justice Sinha stated that the term “commodity” refers to commodities of any sort, as well as something useful or a commercial item.
As a result, Bitcoins fall under the definition of a commodity, as well as intangible property, under Indian law.
Crypto-Currencies As ‘Asset’:-
While Bitcoin transactions are still unregulated, the income and gains generated by Bitcoin transactions have been taxed by the taxing authorities. As a corollary, they might be considered an asset because they are taxed.
As a result, it could be claimed that the government is gradually moving toward regulating Bitcoin transactions.
There has been a steady increase in Bitcoin investment across India and the rest of the world. These investments’ fate is inextricably linked to the fate of Bitcoins. As a result, it is vital to preach on the Legal Aspects of Bitcoins and their Regulation. Based on the foregoing legal position and authorities, it may be determined that it is most appropriate for intangible property and commodities. However, before any judicial pronouncements by a court of law, the very minimum might be said.
The present article has been written by Kiran Israni, 3rd Year Law Student of Baba Saheb Ambedkar College of Law, Nagpur.
The present article has been edited by Shubham Yadav, 4th year Law student of Banasthali Vidyapith.
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