Cryptoassets in Private Law: Emerging Trends and Open Questions from the First 10 Years

Abstract

In 2009, the world’s first “cryptoasset”, Bitcoin, was launched on the world’s first operational blockchain network. Since then, blockchain-based digital assets have proliferated in quantity and diversity and now comprise an asset class that is too big to ignore. Many courts around the world have had to grapple directly or incidentally with blockchain-based digital assets. The continued mainstreaming of Bitcoin and the recent rise of Decentralised Finance (“DeFi”), Non-Fungible Tokens (“NFTs”) and the “metaverse” concept suggest these new digital objects are here to stay, and will continue to raise novel questions as conventional legal doctrines are applied to the banalities and the controversies of this new asset class. The recent collapse of the “stablecoin” Terra (and its supporting cryptoasset Luna) and subsequent developments have underscored the potentially systemic importance of this asset class and the increasing entanglement of “crypto” with the mainstream economic and financial system.

This working paper collates 41 decided cases from around the globe and begins to analyse them. Three emerging trends and three open questions arise in the private law applicable to digital assets in general, and “crypto-assets” in particular. We explore these trends in their geographical context. Globally, (i) the overriding trend is for courts to “backwalk” into private law questions from a specific legal (often regulatory law) issue. The ultimate question at the heart of most cases concerns the property law treatment of cryptoassets, which is a preliminary issue for other questions of substantive and procedural law to be addressed. This question informs the other two trends: (ii) in the Anglo-Commonwealth world, there is a trend towards closer engagement with some of the “downstream” questions relating to cryptoassets’ treatment in the law of property; (iii) in the civil law world, the trend is towards finding workarounds to facilitate the ordered legal treatment of cryptoassets in the more restrictive conceptual schemata typical of Civilian property law.

Open questions include: (i) how digital assets of different types (including cryptoassets) are to be categorised; (ii) what positive attributes of cryptoassets (as distinct from “mere” data) make them capable of being owned by a person, and whether conventional concepts such as “possession” can apply to digital assets (of whatever type); and (iii) the principles applicable to cryptoassets in private international law, procedural law, and enforcement proceedings.

Keywords: cryptoassets, bitcoin, blockchain, Luna, stablecoin, cypto, NFT, non-fungible tokens