Bitcoin is essentially a computer file which is stored in a ‘digital wallet’ accessible on a smartphone or computer. You can receive bitcoin to your digital wallet from others and you can send bitcoins to other digital wallets. Every transaction of bitcoin is recorded in a public list called the blockchain.
Until the recent case of Robertson v Persons Unknown, there was no legal precedent as to whether bitcoin is legal property or merely data. In this case, the claimant made an application to the court for an Asset Protection Order – to prevent any dealings – in relation to 100 bitcoin (worth c. £1.2m) that had been misdirected from the claimant’s digital wallet to fraudsters.
There are two forms of property under English Law: ‘chose in possession’ and ‘chose in action’. The former is property that can be taken possession of – such as notes or coins – and the latter is property obtained and enforced by means of legal action – such as money owed. However, bitcoin is intangible and not capable of being a physical object; it also does not require enforcement against another in order to realise its value. It would therefore appear that bitcoin could be categorised as merely data or information; a chose in action.
However, Mrs Justice Moulder made the Asset Protection Order in relation to the bitcoin, suggesting that it was personal property and therefore open to proprietary claims, remedies and injunctions. This is no different to intellectual property assets, which are also intangible assets, but yet are treated as a “chose in possession” in law, and it would be difficult to sustain an argument that cryptocurrencies like bitcoin are anything else.
Whilst Mrs Justice Moulder’s decision could be subject to appeal, it would appear that the courts are recognising cryptocurrency and digital assets entering the marketplace in the right way and are making appropriate court orders to protect crypto asset owners.
Please do not hesitate to contact Nicola McNeely at [email protected] or on 07870 261520 for any further advice.