A legal coffee: Asking Joaquin Simonetti

Joaquin is a young Chilean lawyer who focused his thesis on cryptocurrencies. Its definition, the relationship with money and its possible evolution in the legislation in which we live. If the thesis is fantastic and very explanatory, so I have asked him to answer some questions, those questions that tend to haunt me in the world.

What pushed you to write this thesis about cryptocurrencies?

What pushed me to write this thesis was the fact that as I became interested in the world of cryptocurrencies, I realized that there was a lack of academic development of the concept of cryptocurrency and its other edges, which makes it difficult its study and understanding for those who are not related to the area of information technology, this gap also generates a problem of uncertainty, since the introduction of cryptocurrencies into the monetary system not only generates challenges for a specific field of knowledge, but also , its understanding and study generates challenges in multiple areas of knowledge including economic and legal sciences, that is why I decided to generate a document that addressed cryptocurrencies from the perspective of the social sciences, collecting economic and legal concepts that would allow to address and generate a concept of cryptocurrency and study its legal nature.

Did you take any surprise in the completion?

The biggest surprise that took me was that in the three months that I spent just writing this report, I saw a considerable increase in the price of some cryptocurrencies, especially Bitcoin, another surprise was to find an incipient development in some foreign legislation, which they have tried to address and integrate cryptocurrencies into the monetary system, without prejudice to those systems that have been reluctant to accept the change represented by cryptocurrencies.

How would you summarize it?

This report is an introduction to the analysis of the phenomenon of cryptocurrencies from the perspective of the social sciences, specifically from the legal point of view. First, to note the difference between the abstraction that is the money of the means of representation of the same, second delivery of relevant concepts for the compression of the current monetary structure, third formulates and explains a concept of cryptocurrency, in order to have a point of firm departure in their study, and finally addresses the issue of the legal nature of cryptocurrencies in general, as well as in the specific case of Chile.

How long before cryptocurrencies are recognized as money?

In the first place it is necessary to clarify that in economic terms the cryptocurrencies are means of representation of money, since, these allow to fulfill all the functions of the same and in monetary terms they fall into the category of the digital currencies, now in legal terms that cryptocurrencies are recognized as money, means applying the same legal rules that apply to traditional currencies to cryptocurrencies, both tax, civil, banking and so on, from that point of view there are two ways in which recognition can be granted “as money “to cryptocurrencies one of them is the recognition of cryptocurrencies as a currency, that is “any means of payment encrypted in a currency other than the domestic one” that is, the recognition of cryptocurrencies as means of payment, if this criterion eliminates certain tax and civil obstacles that make it difficult to use cryptocurrencies as money, ah Now, it must always be borne in mind that cryptocurrencies go beyond being a means of payment but are also financial products and even merchandise and this criterion can only be applied by observing that cryptocurrencies are going to be used exclusively as a means of payment, this way at least has been understood by the Court of Justice of the European Union in the judgment C-264 / 14- Hedqvist.

Failure that is widely explained in my work, the truth is that the option to recognize cryptocurrencies as currency is the one that seems more logical to me nowadays, since, another form of recognition would be to grant legal tender to cryptocurrencies, which we can understand as “The legal relationship that derives from the currency of a country as a means of payment or an instrument for the extinction of obligations” The legal tender of the currency implies that the creditor is obliged, by legal provision to receive it from your debtor when the delivery for payment, ie the cryptocurrency through this recognition acquire coercive release, this kind of recognition does not seem appropriate, since it means forcing people to receive cryptocurrencies in their businesses or to cancel a debt in a mandatory way, as if they were euros in the European Union or Pesos in Chile, and nowadays it is not possible because the cryptocurrencies still They do not reach such maturity, which allows them to be used with such a daily life, on the contrary recognizing it as a currency allows us to work with the same rules as those applicable to Fiat money under two copulative requirements:

1. That there is an agreement between the parties to use cryptocurrencies as a means of payment or instrument to extinguish obligations.
2. That these cryptocurrencies are used only in order to be a means of payment.

Now, compared to what is needed for cryptocurrencies to be recognized as a currency or currency of legal tender, this depends on the processes and stages in which each country is with respect to the expansion in the use of cryptocurrencies, there are solid arguments that allow sustaining that the cryptocurrencies should be recognized as currency, the aforementioned sentence is proof of that, but one thing is that these arguments exist and another that are discussed both in courts, competent administrative bodies, and parliaments, and that depends on the impulse of cryptocurrency organizations and companies around the world, which in each country consult with the competent services, generate dissemination and education projects aimed at people who still do not understand or do not know that there are cryptocurrencies, fight the issue in courts etcetera, in the end when the cryptocurrencies will be recognized as money, I think it will be soon at least the recognition as a currency, which is already possible in the European Union and for Latin America I would say that in the next 5 years.

Does it affect the fact that it has been recognized as a currency in Japan?

The recognition in Japan of cryptocurrencies as a “legal method of payment” represents an advance, both because of the size of their economy and the stability of their own currency, but it does not mean that, for example, the Central Bank of Chile recognizes to foreign currencies such as Currency of foreign legal tender, cryptocurrencies in Chile will automatically be forex, in the first place, because, it can be understood that it refers to the legal course that grants coercive liberation power not to recognize as a legal means of payment and second, because, even so, a pronouncement from the competent authorities in each State is necessary. Even so, it is interesting to study how the process is carried out in Japan and to use it as an example when other nations decide to legislate on the issue.

Do you think that the Fiat monetary system is defending itself in some way?

There has been resistance, on the part of the banks as well as some states such as China and South Korea, here in Chile in particular for example the Bank of Chile a few months ago issued a statement, in which he recommended his workers not to invest in them, arguing more than anything that this is a product without regulation therefore suitable for anonymous transactions, also the Chilean exchanges have had problems with withdrawals, because many have not had access to current accounts, which allow them to make unlimited deposits. that has caused annoyance and pecuniary losses in the users of these platforms, however, that resistance by banks and states has also failed to prevent the market from growing, and in the end consumers will end up turning to a technology and concept of means of representation of money that is qualitatively superior with respect to Fiat money, both in transaction costs security, and applications that adapt to the needs of the digitized world in which we live.

Joaquin is in the process of publishing all his work in a chain of blocks, as it should be. As soon as you do, we will invite you in some way, that you do not expect.

Daniela Caro

Daniela Caro

Writer by birth, curious by profession ... I learn a little more every day from the cryptocurrency.