August EWJ 24 - Flipbook - Page 58
Crypto Assets as Personal Property:
Neither a Thing in Action, Nor a Thing
in Possession
Cryptocurrencies and blockchain technology have become increasingly commonly used in recent years.
The more widespread their appearance, use and accessibility, the more there inevitably have been and
will be disputes arising relating to various aspects of this technology and the associated asset types.
The English courts have in recent years had to
consider a number of fundamental legal issues concerning how these products, systems and technologies
can be categorised and fit within established legal
principles and frameworks, including, importantly,
whether crypto assets can be considered to be property.
either of these categories, the view was that it could
not be an object of personal property rights.
The common law in England and Wales has
developed on from this in the last ten years towards
recognising a third category of things to which personal property rights attach, but which do not easily fit
into the two traditionally recognised categories of
property. The case law on this issue extends beyond
questions of property concerning digital assets, also to
for instance, carbon emissions allowances, export
quotas and waste management licences.
The position in law as to whether crypto assets have
property rights and, if so, of what nature, is essential
as a starting point for determining access to causes of
action and a host of other consequential legal issues,
because property rights can be recognised against any
third parties, whereas other types of rights are more
limited in nature, for instance contractual rights which
can only be recognised against a party who has
assumed a relevant legal obligation.
The consideration of this question by the courts
regarding digital assets has been alongside careful
consideration, including in industry consultation, also
by others, in particular, for present purposes, the UK
Jurisdictional Task Force (“UKJT”) and the Law
Commission.
We provide a short summary here of how the law on
property has developed and is developing in relation
to crypto assets, with a focus on Mr Justice Bryan’s reasoning in AA v Persons Unknown [2020] 4 W.L.R. 35 and
the draft Bill proposed by the Law Commission in its
consultation paper published in February 2024.
In AA v Persons Unknown, Mr Justice Bryan recognised
that treating Bitcoin and other cryptocurrencies as a
form of property would be challenging prima facie,
because of the traditional approach in common law.
He noted that cryptocurrencies are not things in possession because they are not tangible, they are virtual
and they cannot be physically possessed. He said that
cryptocurrencies are not things in action because they
do not embody any right capable of being enforced
by action.
Traditionally on the question of property, the courts
followed Fry LJ’s dictum in Colonial Bank v Whinney
[1885] 30 Ch.D 261, who held that “All personal things
are either in possession or action”. Further to this, it was
generally understood that a thing was only considered
to be “personal property” in English law if it was a
thing (or chose) in possession (being tangible, movable and visible) or a thing in action (being capable of
being claimed or enforced through legal action or
proceedings). These two categories were considered
to be exhaustive, such that if a thing did not fall into
EXPERT WITNESS JOURNAL
However, he went on to say that it would be “fallacious
to proceed on the basis that the English law of property recognises no forms of property other than choses in possession and
choses in action”. The judge's reasoning for this was
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