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Modern legal English virtual assets

Virtual assets and law

Virtual asset - an intangible asset that is subject of civil rights, has value and is expressed in a set of data in electronic form.

Home assignments:

  1. Read the text and put questions to each paragraph.
  2. Explain the features of virtual assets.
  3. Learn vocabulary.
  4. Do the test.
  5. Get ready for a legal battle.
  1. Since 2009, when the first virtual currency, bitcoin, was created, the market for virtual assets and virtual currencies has been growing rapidly and has become significant for the global economy.

The total capitalization of virtual assets and virtual currencies is hundreds of billions of US dollars, the daily trading volume in the virtual currency market exceeds 10 billion US dollars.

Ukraine is among the top 10 countries in the world in terms of the number of users of virtual currencies.

According to expert estimates, the size of the mining segment in Ukraine reaches 100 million US dollars and more per year, the volume of ICO/ITO (initial coin/token offering) companies with Ukrainian origin or the location of development teams – about 100 million US dollars.

The above shows that in Ukraine the sphere of virtual assets and virtual currencies is actively developing.

Ukraine is currently developing legal framework regarding activities related to virtual currencies, including the legal status of virtual currencies, taxation of transactions with them, and the possibility of concluding smart contracts.

The parliament legalized cryptocurrencies in Ukraine

Further development of effective legal regulation of the operation of virtual assets in Ukraine will be implemented by creating a regulatory framework harmonized with EU requirements and an organizational basis for the development of the market of virtual assets and virtual currencies in Ukraine.

Vocabulary

Virtual asset – an intangible asset that is subject of civil rights, has value and is expressed in a set of data in electronic form.

Virtual asset wallet – software or software and hardware that provides its user with information about his virtual assets and the ability to dispose of them in the system of virtual assets turnover using the virtual asset key.

Mining – the implementation of calculations aimed at maintaining the functioning of the distributed register of records in the form of data (in particular, built on the basis of a blockchain).

Blockchain is a digital distributed, decentralized, public ledger that exists across a network.

Smart contract – an electronic transaction, the execution of which takes place automatically (including concluded in a distributed register of records in the form of data). The content of the smart contract is fixed in the form of the program code of the computer program, suitable for perception by the persons working with the corresponding type of computer programs.

Criminal proceedings – pre-trial investigation and court proceedings, procedural actions in connection with the commission of an act provided by the law of Ukraine on criminal liability

Pre-trial investigation – a stage of criminal proceedings that begins from the moment of entering information about a criminal offense into the Unified Register of Pre-trial Investigations and ends with the closure of criminal proceedings or sending an indictment to the court.

Cryptocurrency – a type of virtual asset.

Bitcoin is a decentralized digital currency that you can buy, sell and exchange directly, without an intermediary like a bank.

Secured virtual asset – a virtual asset that certifies property rights, including claims to other objects of civil rights.

Ownership of a virtual asset – is acquired upon the creation of a virtual asset, the commission and execution of a transaction on a virtual asset

Token is a digital unit of account within a distributed register of records in the form of data that has cryptographic protection. The token can be used to certify the existence of rights to objects of civil law and / or obligations.

Virtual assets market – a set of participants in the market of virtual assets and the legal relationship between them regarding the turnover of virtual assets

Сybercrime – the use of a computer as an instrument to further illegal ends, such as committing fraud, trafficking in child pornography and intellectual property, stealing identities, or violating privacy.

Blockchain – a digital distributed, decentralized, public ledger that exists across a network.

Investigator’s ordinance (investigator’s decision) to close the criminal proceedings – a form of terminating the pre-trial investigation in the criminal case.

Legal battle on virtual assets

At the request of a citizen of Ukraine S., the Cybercrime Department in the Transcarpathian region opened criminal proceedings No. 2345432288.

Citizen S. reported that on October 12, 2021 her electronic wallet for storing the BLOCKCHAIN cryptocurrency was hacked and all funds in the amount of 6.2543235 BTC were withdrawn to an unknown email address.

During the pre-trial investigation, the victim S. explained that during 2014-2021 she purchased bitcoins for money on the Ukrainian cryptocurrency exchange, and as of September 12, 2021 there was such a cryptocurrency in her electronic wallet in the amount of 6.2543235 BTC that to the US dollar was 167,427 US dollars.

Access to S.’s electronic wallet was carried out using a login and password, which she did not disclose to anyone, and therefore S. excluded access to the data from other persons.

At the same time, on October 13, 2021 she “entered” the specified e-wallet and found that there were no bitcoins on her account. The electronic resource contained information about the withdrawal of October 12, 2021 at 04:27 am. from her e-wallet to another unknown e-wallet of all bitcoins.

By an investigator’s ordinance of the senior investigator in the Transcarpathian region of Captain M. dated November 18, 2021 the criminal proceedings № 2345432288 dated October 13, 2021 under Part 3 of Article 190 of the Criminal Code of Ukraine were closed (termination of criminal case) on the basis of Clause 2 Part 1 of Article 284 of the CPC of Ukraine for absence of any crime.

The reason for this decision of the senior investigator was his conclusion that bitcoin is not a thing in the understanding of Article 179 of the Civil Code of Ukraine, has no signs of an object of the material world and is not a product, and therefore the investigator concluded that there was no subject of a crime in this case, excluding its composition, provided by Article 190 of the Criminal Code of Ukraine.

Should we agree with the findings of the senior investigator? Give your answer with reference to regulations.

  1. Answer the following questions:
    1. What is the key problem of the situation?
    2. Who are the parties in context of the situation?
    3. What type of legal relationship arises between the parties?
    4. What normative acts regulate the legal relationship that has arisen?

2. Practical task 2 (at the lesson): to make legal analysis of the situation given you’ll be divided into the following groups:

1) the lawyers – citizen S.’s representatives 2) the prosecutors – representatives of senior investigator 3) the court – judges.

Additional Information

The Phenomenon of Virtual Assets: Economic and Legal Aspects

Virtual assets: Non-fungible tokens and law

THE FERVOR AROUND BLOCKCHAINS EXPLAINED IN TWO MINUTES

Cryptocurrency and legislation in Ukraine

Crypto currency and law

Закон “Про віртуальні активи” (текст)

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