First, with the entrance of cryptocurrencies and other crypto assets into our lives, the issues of “what” the assets owned by individuals and “what rights” they have on these began to come to the fore. Payments with cryptocurrencies, usage of NFTs as collateral, and transactions with stablecoins... With these, the use of crypto assets in business and trade life has increased.
As with many technological developments, the law has stayed behind crypto assets. Many countries faltered regarding evaluating these new assets in existing assets and how to follow their legal characterization. On the one hand, we constantly encountered new crypto assets; crypto monies, security tokens, NFTs, stablecoins, central bank digital currencies… Therefore, it was necessary to make separate evaluations of crypto assets with different characteristics. On the other hand, it has not been possible to place these entities, which have their own characteristics, within the classical, customary legal concepts and institutions, because these are digital data entries in the blockchain that do not have a physical presence and cannot be seen with the naked eye.
Despite all these difficulties, we see that there has been an acceleration in the legal regulations regarding crypto assets, especially since 2018. In Europe, the MiCA (“Markets in Crypto Assets”) Regulation will begin to be executed in 2024 after a long preparation and negotiation process. Apart from this, countries such as Switzerland, Germany, Liechtenstein, and Malta have come a long way in making regulations regarding crypto assets.
When we look at the countries that adopted the Anglo-Saxon Law, we see that the court decisions on these issues for almost five years have been very guiding. Indeed, it is possible to come across precedent decisions in many countries on the legal nature of cryptocurrencies and what rights can be established on crypto assets.
The importance of cryptocurrencies as an investment asset with the spread of blockchain technology raises important questions about the legal nature of crypto assets. Even before 2023, courts in the United Kingdom, Singapore, and New Zealand had decided that crypto assets were considered property to place crypto assets, especially cryptocurrencies, within the scope of traditional property law rules. It is possible to encounter decisions that specifically state that NFTs are properties in the United Kingdom and Singapore. Apart from that, cryptocurrencies have long been considered properties in terms of taxation in the US.
Even just looking at the year 2023, it is possible to see that important decisions have been made regarding the determination of the legal nature of crypto assets in countries adopting Anglo-Saxon Law. In March, a court in Hong Kong explicitly ruled that cryptocurrencies should not be separated from other proprietary assets and that real rights, such as ownership, will also apply to digital currencies (Re Gatecoin Limited [2023] HKCFI 91 (Re Gatecoin)).
Another important decision was rendered in Singapore last July. In the case regarding the theft of USDTs, the judge first made the following determinations: It has become common practice to rule that crypto assets are items that can be held in trust to be able to issue an injunction decision. However, in this case, it is necessary to clarify whether USDT is an item that can be kept in trust, and if it is an item, what type of item it is. In this context, the court ruled that USDT and cryptocurrencies, in general, are “things in action” even if they do not have physical existence (ByBit Fintech Limited v Ho Kai Xin & Ors. [2023] SGHC 199).
Based on these court decisions, it is possible to make the following determination: In countries such as the United Kingdom, Singapore, Canada, the USA, Australia, and New Zealand, court decisions that crypto assets have the quality of properties have become precedents.
Finally, it is worth mentioning that although the existing property law rules have become established with the judicial decisions that crypto assets are property, another current trend in Anglo-American Law is the new rules that include crypto assets by setting clear and new rules towards the creation of an asset class. It is obvious that the issue is too important to be left to judicial decisions alone and that it needs legal certainty. For example, with the changes made in the UCC (Uniform Commercial Code) in the USA, a type of record called “Controllable Electronic Record”, which includes crypto assets has been adopted. According to the UK Law Commission, a third category of “digital assets” should be created in addition to existing, de facto tangible assets and assets such as debt or shares in a company.
