FULFILMENT OF THE OBLIGATION IN THE FORM OF A VIRTUAL CURRENCY?

#28Fulfilment of the obligation in the form of a virtual currency?

Cryptocurrencies are virtual currencies that use cryptography - a technique for encrypted communication. This system ensures secure online payments.

Virtual currencies are gradually expanding for ordinary trading. Some trading companies have started to use virtual currencies as an alternative method of payment, so the customer can choose whether to pay for the goods in the standard currency or use the virtual currency.

Until recently, the legal order of the Slovak Republic did not recognize the generally legally binding concept of cryptocurrency or virtual currency. Definition of a virtual currency might be found in section 1 of the Methodological Guidelines of the Ministry of Finance of the Slovak Republic. „For the purposes of this Guideline, a virtual currency is a digital bearer of value that is not issued or guaranteed by a central bank or public authority, nor is it necessarily linked to legal tender, has no legal status of currency or money, but is accepted by certain natural or legal persons. as a means of payment and which can be transferred, stored or traded electronically“. 

So, is it possible to successfully file a lawsuit for fulfillment in the form of virtual currency?

The standard action for the performance in money is regulated in Section 265 et seq. Act no. 160/2015 Coll. Civil Procedure Code as amended (hereinafter referred to as „CPC“). According to Section 218 Par. 2 of CPC,  - there is a possibility to form a statement of the decision also in a foreign currency - money, ie it is possible to request payment of the amount e.g. in dollars or pounds. However, under Section 218 Par. 3 of CPC, that fulfilment must be "... expressible in a non-interchangeable manner other than by quantification, in particular by reference to the precise method of determination, if it follows from a special regulation".

Therefore, one of the main problems is volatility. If a bailiff is to receive a proposal for execution in the form of virtual currency, he or she must first consider whether it can be executed at all. If the bailiff concludes that the execution on the virtual currency can be performed, the question arises - at what value? The value of virtual currencies fluctuates during the day, so the amount that the debtor would have to pay to the beneficiary would vary.

So far, there is no competent body in the conditions of the Slovak Republic ensuring legal protection and enforcement of agreements concluded by the contracting parties in virtual currencies. The tax authorities know the definition of virtual currencies, but this definition has been adopted because of their taxation and is legally binding only on these entities. Considering the aforementioned, execution covering virtual currencies might be problematic.