The following Restructuring & Insolvency guidance note Produced in partnership with Charlotte Moller of Brown Rudnick LLP and Claude Brown of Reed Smith provides comprehensive and up to date legal information covering:
In its simplest form, cryptoassets are a virtual currency which uses encryption to verify transactions denominated in that currency. Payments which use cryptoassets generally take place on a peer-to-peer basis, without the need for intermediaries such as payment processors, thus offering increased speed and lower transaction costs.
For further reading on the formation of cryptoassets, see:
Fintech—overview and Cryptoassets—overview
Practice Note: Cryptoassets—essentials
In this Practice Note, we consider some of the issues that an insolvency professional (including an insolvency practitioner (IP)) might face if appointed to deal with a cryptoasset related insolvency. This Practice Note does not consider the implications of cryptoassets in a personal bankruptcy scenario.
It is widely acknowledged that legal and regulatory oversight of cryptoassets is somewhat behind the curve. Taking a focused look at the potential implications of a cryptoasset insolvency, it is clear that the route to restructuring, recovering or winding down the affairs of an entity connected with cryptoassets is far from established.
Given the surge in the adoption of cryptoassets, it is within contemplation that corporate failures will arise in this sphere in the coming months and years.
There have been high-profile insolvencies of cryptoasset exchanges, which show that this is a real concern. For example,
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