Judge Judith Gibson allowed cryptocurrency use as collateral for legal costs as part of a defamation case submitted before the New South Wales, or NSW district court.
“However, this is a recognised form of investment,” Gibson said of cryptocurrency in a judgment this week.
Hearing a defamation claim, the NSW District Court was asked to force a plaintiff to put $20,000 (approximately $13k USD) into a bank account controlled by the court. The amount would cover some of the legal costs expected of the defendant, in the case the complainant lose or withdraw the case.
In addition to that, the court has allowed the plaintiff to use their cryptocurrency exchange account instead of a bank account.
Monitoring The Cryptocurrency Account
Given the concerns of the defendant’s legal team’s instability, the plaintiff agreed to provide monthly reports on the status of the value of the crypto account.
The courts also required the complainant to notify the defendant’s solicitor if the value of the crypto account drops below the $20,000 AUD.
“I can see the desirability of the defendant receiving prompt notification of any drop in the value of the account,” Gibson said. “These are uncertain financial times.”
Although use of cryptocurrency as collateral is not the most glamorous use case, it is showing increasing industry validity in the eyes of governments around the world.
In a related context, Cryptolydian reported earlier this month that Sarah John, Chief cashier of the Bank of England (BoE), said that central banks have to research digital currencies so they can strike a balance with private issuers.
She said it was “really important” that BoE and other central banks considered whether digital currencies could form the basis for a new payment system and, if so, “quicken the pace” on how the new asset class should be regulated.