Crypto and the Property Question

Abstract

Is crypto property? The proliferation of digital assets such as cryptocurrencies, stablecoins, memecoins, and NFTs has confronted legal systems worldwide with three interdependent challenges: determining whether they are property, identifying their appropriate classification within property taxonomies, and establishing rules for their circulation in commerce. Our Article addresses this tripartite question—the Property Question—within American law.

The stakes here are significant. Billions of dollars in digital assets are traded daily, used as collateral, and held by custodial platforms. Yet all these transactions rest on an unresolved premise: that digital assets can be owned and are governed by established property rules. This fundamental uncertainty affects everything, spanning the recovery of stolen cryptocurrencies, customers’ rights in crypto platform bankruptcies, good faith purchaser protections, and even tax and accounting.

This Article makes two primary contributions. First, we provide a comprehensive analysis of digital assets as property under American law, examining both the historical development and the current framework under the new Article 12 of the Uniform Commercial Code. Second, through this investigation, we illuminate a broader pattern in the evolution of American property law: formalistic reasoning and traditional categories, such as choses in action and chosesin possession, have given way to a more functional approach that prioritizes alignment with market practices and societal expectations.

Answering theProperty Question yields significant normative insights. We clarify uncertainties that presently beset property rights in digital asset markets, thereby establishing solid foundations for regulatory interventions in this space. Furthermore, our analysis sheds light on how American law understands and governs personal property, revealing a distinct approach that favors pragmatism over doctrinal purity. Together, these insights not only help us navigate the rapid evolution of digital assets but also offer a blueprint for incorporating future forms of intangible property into our legal system.

Keywords: UCC, Uniform Commercial Code, Commercial Law, CER, Controllable Electronic Record, Crypto, Bitcoin, Bankruptcy, Contract Law, Secured Transactions, Sales, Property Theory, Property Law