How Does the Legal Framework of a Country Affect Bankruptcy Proceedings for Crypto Exchanges?

The legal framework of a country is paramount in determining the outcome of a crypto exchange bankruptcy. Countries with specific digital asset legislation may have clearer procedures for handling customer funds.

In contrast, in countries without such laws, the courts must apply existing, often outdated, property and bankruptcy laws to a new technology. This can lead to unpredictable outcomes.

The legal system also determines the priority of creditors, which can affect whether users are repaid before or after other business lenders.