The supreme court of Brazil has made a decisive move to treat digital cryptocurrencies as valuable financial assets. The judges are now empowered to seize digital currencies from those who are indebted and do not pay. The new development has been approved by the Superior Court of Justice following a unanimous verdict by five members.
The panel ruled on a case in which a creditor had a victory in a lawsuit but couldn’t track down any money or assets in the debtor’s name. With this decision, judges can send formal requests to crypto brokers. The latter must then report and surrender any digital assets belonging to the debtor.
Courts can now seize crypto in debt cases
This is an evolution of how the courts treat cryptocurrencies. Previously, money could be frozen in banks using the BacenJud system. However, cryptos do not pass through conventional banks. Because of this, numerous debtors concealed funds in digital wallets, out of reach of the courts.
Now that this ruling has passed, the courts finally have a means to reach those concealed assets. Crypto is not currency by its official label, but it can serve as a payment system and a means of saving. This has led to it being likelier to be used by debtors who seek to evade legal enforcement.
Minister Villas Bôas Cueva mentioned there are no formal rules yet for digital assets. Congress has not enacted legislation fully demarcating or regulating them. Nevertheless, the court did embrace the belief that such assets are of real-world value and can be seized in cases of debts.
Ruling opens path for creditors to seize crypto
In the last few years, Brazilian judges and the regulators in this nation have become increasingly focused on crypto. The National Council of Justice has already examined the presence of blockchain and digital currency in cases before the courts. This new ruling strengthens that effort and indicates a clear path.
The ruling opens a legal window for creditors. It provides them with new avenues to reclaim money and fewer ways to hide funds from their debtors. It sends a signal to crypto holders that the government will not let these assets go untouched.
By linking digital wealth to legal enforcement, Brazil is taking a step in the right direction in its effort to modernize its system of financial justice. This would encourage lawmakers to expedite regulations and address the issue of crypto use throughout Brazil.
