The Central Bank’s Attorney, Danilo Takasaki Carvalho, praised the blockchain technology during an event in Rio. He said the technology can prevent fraud, highlighting the immutability and the transparency of the records in blockchain. For him, the blockchain can generate trust among strangers in a market where bank institutions are very dependent upon one another. “A bankruptcy of an institution can be transmitted to other and affect the entire economy. Trust is essential to keep our money in banks. But there are many cases in which fraud occur generating severe crises. ” The Attorney also mentioned the smart contracts for solving contractual crisis in the banking system.
Conversely, the Attorney pointed out some problems, according to the Portal of the Bitcoin. For instance, bank insolvency clauses cannot be addressed by a smart contract. Such concern is raised because from the point of view of the regulator, it is necessary to look at the stability of the financial system. So, if there is an automation of the contracts fulfillment, there may be a systemic crisis.
Attorney mentioned difficulties in attachment orders with blockchain
On the other hand, the Attorney explains that there isn´t a solution to a possible attachment order of bitcoin by the Legal Authorities. He explained that there are challenges in knowing whether a company actually owns crypto. And in the case of court-appointed auditors due to bankruptcy, it’s hard to know the time to sell the assets to cover the debts of the liquidation mass. In addition, the volatility of the currency can bring losses to the creditors.
According to the American lawyer, James Sullivan, first it is necessary to understand if the bitcoin is a currency, a high-value commodity such as gold or just a kind of security. He referenced the difficulty in knowing who owns the bitcoins and also mentioned the difficulty of implementing attachment orders.
Sullivan has also mentioned the banks’ interest regarding the cryptocurrencies, mentioning the creation of JP Morgan stablecoin. The 1st international Seminar of Insolvency and Restructuring took place in the School of Judiciary of Rio de Janeiro (Emerj).