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The possibility of pawning cryptocurrencies in processes of execution as a way to avoid the concealment of assets

The possibility of pawning cryptocurrencies in processes of execution as a way to avoid the concealment of assets

5/30/2022

One of the most significant difficulties faced by creditors in Brazil is finding assets for the debtors to pawn, not being rare having prescribed cases where not enough assets have been collected to satisfy the needed credit.

 

It is also common the situations where the defaulter, knowing the size of the debt, utilizes maneuvers to hide the assets before any kind of lawsuit, withdrawing the amounts available in their bank accounts, transferring funds to third parties, or, more recently, acquiring cryptocurrency.

 

Considering that scenario and the fast growth in the number of cryptocurrencies transactions – which has grown from 91,4 billion in 2020 to 200,7 billion in 2021 – it is very important to adapt the law to this new technology.

 

Not coincidentally, it has been observed an exponential growth in the number of requisitions during legal actions of official letters to brokerage firms, through the Brazilian Association of Cryptocurrencies (ABCripto), so that the localization and freezing of these assets can take place.

 

However, even though there is a significant necessity to authorize the freezing of cryptocurrencies, it is urgent to regulate them. The necessity of regulation is highlighted by a lack of a peaceful definition of the legal nature of cryptocurrencies and regulation in Brazillian law.

 

It is a fact that the Internal Revenue Service considers cryptocurrencies as financial assets, moreover taxing them and requiring information about it, as shown in the Normative Instruction RFB n. 1.888/2019, in a way that it could be compared to the money saved on financial institutions or to the securities, in which pawning is permitted, respectively by the clauses I and III from article 835 of the Code of Civil Procedure.

 

Moreover, the change in from the system BACENJUD to the system SISBAJUD has, among other objectives, the possibility of pawning cryptocurrency, which hasn’t yet become effective due to difficulties in the blockchain system in the access to online currency, having the Brazilian Council of Justice(CNJ) produce a statement in that matter:

 

“The cryptocurrencies, for example, Bitcoin and Ethereum, do not have their emission regulated and controlled by the Central Bank of Brazil and are not operated by the financial institutions that compose the National Financial System. We still don’t have any kind of precise data about the financial movement involving those currencies, because, as part of their own nature, they are not deposited in exchanges, making it harder to trace their location for pawning.”

 

For now, in the absence of more effective means to pawn these assets, it is the responsibility of the Judicial system to find alternatives ways to satisfy the credit, for example, through the auction, as determined by the Judge Carlos Alberto Monteiro da Fonseca, of the 54th Labor Court, in São Paulo, State of São Paulo, that has deferred the expedition of oficial letters to breakage offices to inform the existence of cryptocurrencies in the name of the debtors in the case files n. 0192700-88.2002.5.02.0054.

Coauthors: Marco Lorencini and Maria Carolina Oliveira Chiacherini

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