In our article of December 2019 we reviewed the UK Jurisdictional Task Force’s Legal Statement on the Status of Cryptoassets and Smart Contracts, which considered key legal questions about cryptoassets and smart contracts. Whilst traditional legal analysis suggests that cryptoassets would not be recognised as “property”, the Legal Statement sets out compelling reasoning to conclude that cryptoassets could in fact form a new category of property, with important consequences in cases of fraud, theft and in the insolvency arena and regarding succession on death. Where a cryptoasset is recognised as property, security may be granted over it and a trust declared in respect of it.
In the important recent decision AA v Persons Unknown and Others, re Bitcoin, the English High Court granted an interim proprietary injunction over Bitcoin on the basis that Bitcoin constitutes property under English law and is therefore capable of being the subject of such an injunction. The AA decision is the first common law decision to give detailed consideration to the legal status of cryptoassets, and, in particular, the first to approve the analysis set out in the Legal Statement.
Whilst there remains a number of technical questions and complexities regarding the prosecution of litigation relating to cryptoassets, and the law in this area is highly fact-sensitive, this judicial endorsement of the reasoning set out in the Legal Statement so soon after its publication will add significantly to its authority, both in England and beyond.
In our latest article, we consider the AA case and its ramifications in more detail.