Is it feasible to use cryptocurrencies as a contribution of assets to social capital?

Since the beginning of the century, the world has found new ways of carrying out commercial, financial and savings transactions in order to make economic exchange more efficient. One of these innovations is the creation of so-called cryptocurrencies (cryptocurrencies), which, in general terms, are digital currencies in which encryption techniques are used to control the generation of more currencies and thus be able to verify the transfer of funds[1], the control of cryptocurrencies is given through a decentralized database and transactions are verified on a chain of blocks or Blockchain. This blockchain is like a public file that acquirers can enter.

Cryptocurrencies began to develop commercially during the past decade through a process called mining, with Bitcoin being the first to appear. These cryptocurrencies have had a sustained growth and more and more participants are gaining, for example, in February of this year the price of a Bitcoin reached the sum of $ 50,000 for the first time and to date around 18.593.00 Bitcoins have been issued. 21 million total. It is worth mentioning that there are other cryptocurrencies[2], one of them is Ether, which is the first digital currency based on a blockchain called Ethereum that allows the creation of Smartcontracts.

The use of cryptocurrencies has certain benefits, such as independence in transactions since it does not require the intervention of an additional financial entity (eg a bank), and this significantly reduces transaction costs and generates a feeling of greater among users. closeness. Another quite notable advantage is that more and more companies are accepting bitcoins as a payment method for the goods and services they offer. Additionally, they are global currencies that can be used at any time and anywhere in the world.

However, they also have certain disadvantages, especially with regard to the security of their processes and the lack of control over the identity of the users, generating in many cases a black market. On the other hand, the use of cryptocurrencies could eventually have problems of restricting access to the network by the security policies of some governments, which would slow down transactions. We must also mention that these processes are not exempt from the possibility of suffering cyberattacks. Additionally, they have relatively high levels of volatility, which could be considered by some as a risky investment.

Regarding government regulation in each country, this is still quite incipient due to the short time that cryptocurrencies have in the market and the lack of knowledge regarding how they work on the part of the authorities. However, the position of the majority of governments that have spoken out on the matter has been one of concern about the lack of control. In Europe, Christine Lagarde, president of the European Central Bank, stated[3] that it is necessary to have a globally agreed regulation since it is a highly speculative asset and that it can facilitate illicit business and money laundering operations.

However, there are countries that are taking a step forward and have allowed the use of cryptocurrencies not only for merchandise exchanges, but are also opening the possibility of using them as capital contributions for companies. It is interesting to mention the case of Colombia, in which the Superintendency of Companies established the possibility of making contributions in kind of crypto assets to the capital of companies, but with some conditions. In the first place, the criteria for the recognition of inventories or as intangible must be met, in accordance with the regulations in force on the matter, making a broad disclosure of the economic fact, secondly, the legal regulations that regulate the contribution must be fully complied with. in kind, and finally, the partners must approve the appraisal of these, at which point they are jointly and severally liable for the value they have attributed. From a legal perspective, Article 126[4] and following of the Colombian Commercial Code establish that contributions can be made in goods other than money.

Similarly, in Spain Limited Companies have already been established using bitcoins as initial capital. While the United Kingdom published in January this year the document entitled UK regulatory approach to cryptoassets and stablecoins: Consultation and call for evidence[5] which seeks to be a tool to obtain information from the participants of the cryptocurrency industry in order to design a legal regulation according to the needs of the agents involved, while the Secretary of the Treasury mentioned that the risks will continue to be actively monitored new and emerging as this market continues to mature.

On the other hand, the European Union[6] Through the European Commission, it approved, in September 2020, a group of measures focused on improving competitiveness and innovation in the European financial sector. This regulation of operational digital resilience seeks to establish a single European framework of obligations, principles and requirements in terms of cybersecurity for the financial sector with the aim of ensuring that the European Union embraces the digital revolution and promotes it with innovative European companies at the forefront, making the benefits of digital finance available to consumers and businesses. In addition to this proposal, the package also includes a proposal for a regulation on crypto asset markets, a proposal for a regulation on a pilot regime for market infrastructures based on decentralized registration technology (TRD), and a proposal for a directive for clarify or amend certain related EU rules on financial services. Digitization and operational resilience in the financial sector are two sides of the same coin. Digital or information and communication technologies (ICT) present both opportunities and risks, which must be well understood and managed, especially in times of stress.

Against this background, it is worth asking ourselves if it is possible that in Peru cryptocurrencies can be used in the incorporation of companies and as a capital increase. In the first place, we will see what the state and regulatory entities have stated in this regard.

The Central Reserve Bank[7] has been quite cautious and has maintained that cryptocurrencies are unregulated financial assets, that they do not have the status of legal tender nor are they backed by central banks. Likewise, they do not fully fulfill the functions of money as a medium of exchange, unit of account and store of value. While the Superintendency of Banking and Insurance[8] maintains that there are cases of money laundering from illicit drug trafficking that have used Bitcoins as a medium. For its part, the Superintendency of the Securities Market[9] stated in a statement that there is no specific regulation in Peru that protects the offer or promotion of cryptocurrencies or virtual currencies, or denominated units of value Tokens, those that do not have the backing of any financial authority or governmental entity; and, therefore, the companies that carry out such offers or promotions are not under supervision.

After these observations, we can deduce that, in Peru, cryptocurrencies are not currently considered as monetary goods. However, we could consider them as intangible assets that have a patrimonial nature.

However, based on the fact that they are intangible assets, we believe that they could be considered as an option to establish public limited companies and also as contributions of assets to the capital stock. The General Law of Companies (LGS) in article 74 mentions that "in the public limited company, only assets or rights susceptible of economic valuation can be contributed[10]". Cryptocurrencies are goods susceptible to economic valuation As we have seen above, the current price of each bitcoin is approximately $ 50,000 (which is subject to daily variations). Therefore, we can argue that they do comply with this requirement established by the LGS.

In the eventual use of this option, the contribution of cryptocurrencies will be deemed to have been made at the time of granting the public deed.[11]. Likewise, in the public deed where the contribution is recorded, a valuation report must be inserted in which the cryptocurrencies, the criteria used for their valuation and their respective value will be described.[12]. We consider that it would be convenient for you to refer to the web portals of verification of block chains[13]. The change of ownership of the cryptocurrencies in favor of the corporation must also be made, this will not only allow the independence and free availability of the assets by the company, but will also serve as a way of verifying the true ownership of cryptocurrencies by contributors.

However, although we have not legally found a specific prohibition for the use of cryptocurrencies as capital contributions, it is important that we analyze the accounting issue. Regarding the consideration of cryptocurrencies as cash or cash equivalents by accounting standards, International Accounting Standard 7 mentions in article 6 that cash equivalents are short-term, highly liquid investments that are easily convertible into specific amounts of cash. , being subject to a negligible risk of changes in its value[14]. In this regard, as we mentioned above, cryptocurrencies are volatile and present high levels of risk, which is why they should not be considered as equivalent to cash for accounting purposes.

On the other hand, article 4.4 of the Conceptual Framework for Financial Reporting of International Financial Reporting Standards (IFRS) defines assets as a resource controlled by the entity as a result of past events, from which the entity expects to obtain, in the future, economic benefits[15]. We believe that this definition could be adjusted to cryptocurrencies to be considered as assets.

Therefore, assuming they are active, We propose the following classification: (i) in the case in which the corporation accepts the cryptocurrencies as contributions in order to sell them and then acquire more, they should be considered within assets as inventories; (ii) if what is sought is to keep cryptocurrencies as assets within the company as an investment, they should be considered as immobilized intangible assets.

Finally, we consider that it is natural that the new generates certain uncertainty, but it is necessary to adapt, because ignoring its existence will not eliminate its use, but this market will continue to exist and the risks that are being talked about will only be enhanced. Therefore, in this case, the law must be willing to adapt the regulation to be able to offer interested parties an additional possibility of being able to make contributions to public limited companies.


*The opinions expressed in this article are those of the author and do not necessarily reflect the views of the administrators of The Crypto Legal blog or the Lawgic Tec association.

[1] Schueffel, P., & Groeneweg, N. (2019). The Crypto Encyclopedia: Coins, Tokens and Digital Assets from A to Z. Growth Publisher. Own translation and adaptation.

[2] The market is quite wide and we can find Deeponion, Litecoin, Dogecoin, Monero, Peercoin, Namecoin, Lisk, Solarcoin, Mercoin, among others.

[3] Available on: https://www.elmundo.es/economia/macroeconomia/2021/01/13/5fff1a72fc6c8300758b45ff.html

[4] Available on: https://www.ccb.org.co/content/download/4599/48339/version/2/file/Codigo+de+Comercio.pdf

[5] Available on: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/950206/HM_Treasury_Cryptoasset_and_Stablecoin_consultation.pdf

[6] Available on: https://eur-lex.europa.eu/legal-content/ES/TXT/HTML/?uri=CELEX:52020PC0595&from=EN

[7] Statement issued on the SBS website: https://www.bcrp.gob.pe/sistema-financiero/articulos/riesgos-de-las-criptomonedas.html

[8] Available on: https://www.sbs.gob.pe/Portals/5/jer/TIPOG_REG/files/Tipologias%20Regionales%20GAFILAT%202017-2018.pdf

[9] Available on: https://www.smv.gob.pe/uploads/COMUNICADO%20ICOS%2021_11_2.pdf

[10] Law No. 26887. General Law of Companies, Article 47

[11] Law No. 26887. General Law of Companies, Article 22

[12] Law No. 26887. General Law of Companies, Article 27

[13] A commonly used check page is https://www.blockchain.com/explorer

[14] Available on: https://www.mef.gob.pe/contenidos/conta_publ/con_nor_co/no_oficializ/nor_internac/ES_GVT_IAS07_2013.pdf

[15]Available on: https://www.mef.gob.pe/contenidos/conta_publ/con_nor_co/vigentes/niif/marco_conceptual_financiera2014.pdf

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Audrey barnett vidaurre
Audrey Barnett is an intern at Estudio Grau CMS. She is also a student at the Universidad del Pacífico and was the director of the law magazine Forseti.

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