A legal precedent was set on the 5th June when a circuit judge in Kentucky ruled that P2P loans taken out in Bitcoin have a legal basis to be repaid. The case arose when Mr. de Souza lent 11.95BTC to Mr.Kerley and subsequently Kerley defaulted on the loan.
The P2P transaction occurred using BTCJam. The website had previously facilitated arbitration between the two parties when the non-repayment of the loan accrued. In the course of arbitration, de Souza was awarded approximately 64BTC. However, Kerley failed to to pay this amount. As a result, de Souza sought further legal action
According to CoinDesk, during the court proceedings, Judge Fletcher viewed Bitcoin as a “highly speculative foreign currency”. Thus, treating Bitcoin as an asset and consideration meant that it could be recovered as part of a lending agreement.
This is an important legal precedent as it shows how Bitcoin can fit within current legal contexts. The legal precedent also means that further legal protection is afforded to those individuals who will want to transact in decentralised digital currency in general. Overall, de Souza was awarded approximately $67,000 in non-repayment accruals.