A court in the Netherlands, has issued a ruling in a civil lawsuit that has potential implications for how bitcoin will be treated under Dutch law.
Notably, the court in Overijssel found that bitcoin does not meet the definitions of "common money", "legal tender" or "electronic money", ultimately ruling that bitcoin is a medium of exchange akin to gold.
The case could set a precedent in the Netherlands for similar lawsuits, as the ruling answers the question of what damages need to be assessed when an agreement to trade bitcoin is not fulfilled as promised.
The court case centered on a 2012 bitcoin transaction between two unnamed parties that was never completed. Party A (the buyer) had sought to buy 2,750 BTC from party B (the seller), but only received 990 BTC.
1,760 BTC never delivered
At the time of the sale, the buyer paid the full sum of €22,000 for all of the BTC, or roughly €8 per bitcoin. After continued delays in the delivery of the remaining bitcoins, the buyer sued the seller.
The Overijssel court ruled in favor of the buyer, and ordered the defendant to pay back the original value of the missing 1,760 BTC (roughly €14,000 at the time) in addition to interest and legal costs.
However, the buyer was not awarded the €130,000 in damages he claimed as the result of lost profits he would have reaped during bitcoin's rapid price surge last year.
The court elaborated on the nature of bitcoin in its ruling, suggesting that the digital currency is not legal tender in the Netherlands. This definition, the court ruled, is limited to euros and other coins issued by the European Central Bank (ECB).
The court reportedly cited statements made by the Dutch Minister of Finance when ruling that bitcoin does not meet the definition of electronic money. The official had previously issued this guidance in response to parliamentary questions.
Ultimately, the judge concluded that none of the definitions of common money under the Dutch civil code apply to bitcoin, though it noted that the digital currency can be accepted as a form of payment in the Netherlands.
Speaking to CoinDesk, bitcoin investor Paul Buitink said that he would like to see the case progress further.
Buitink, an active member of the Dutch and Belgian bitcoin communities – who notably runs bitcoin information website deBitcoin.org – said that the buyer can still appeal the ruling, and such an action could have benefits for bitcoin.
"I think he should do that as we need courts to confirm bitcoin is indeed money in order to boost acceptance in the Netherlands and worldwide.
The importance should not be underestimated, as this should put pressure on the legislators to change the definition of money in Dutch law, and hopefully widen its scope."
Had bitcoin been deemed money, Buitink said, the transaction would have been considered a foreign exchange, and thus the buyer could have been entitled to exchange rate loss.
Dutch parliament building via Shutterstock