Cryptocurrency is a virtual currency or digital asset designed to work as a medium of exchange just like the AUD.
Cryptocurrency is increasingly likely to form part of the assets that a bankruptcy trustee will be required to deal with, so consideration needs to be given to identifying that particular class of assets, preserving their value for the benefit of the insolvent estate, realising the assets in a volatile market and distributing proceeds to creditors based on their particular rights.
Treatment of cryptocurrencies in each administration will vary depending upon the circumstances, in particular on the context in which it is being used (i.e. trading, as an investment, or just buying goods and services).
AFSA has released guidance for bankruptcy trustees about cryptocurrency, including how to identify, classify and realise digital assets. This outlines the Inspector-General’s expectations about the handling of cryptocurrency by bankruptcy trustees.