The legal system has taken some time to come to grips with crypto currency, and other digital assets, but cases over the last 12 months have shown that it is just like other forms of intangible property (debts, shares, IP rights).
This means understanding that if you are dealing with questions of property or asset holdings in legal or financial matters you certainly need to include crypto currency in the mix.
The latest legal consideration
The legal status of cryptocurrency in Australia remains an emerging area. In the recent case of Re Blockchain Tech Pty Ltd [2024] VSC 690, the Supreme Court of Victoria held that cryptocurrency is property, specifically a chose in action (Intangible rights enforceable by legal action, such as debts, shares, or intellectual property rights).
In considering whether the cryptocurrency Bitcoin was property, the Court determined that Bitcoin:
- is identifiable by subject matter as an electronic coin;
- is identifiable by third parties on a shared public ledger;
- is the subject of active trading markets throughout the world, which includes the ability to exclude third parties from accessing or dealing with it; and
- has some degree of permanence or stability through its recording on the ledger.
In his consideration of whether Bitcoin was property, Justice Attiwill referred to a recent speech by Justice Jackman of the Federal Court, which cited several international cases, including the New Zealand High Court's decision in Ruscoe v Cryptopia Ltd (in liq) [2020] 2 NZLR 809, where cryptocurrency was recognised as a form of intangible personal property capable of being held on trust.
In his speech, Justice Jackman concluded that there was no reason why Australian courts might not adopt a similar stance when the time came to consider whether cryptocurrency was property.
Implications for Property Rights
The decision in Re Blockchain Tech Pty Ltd establishes that under Australian law cryptocurrencies are property, which grants owners specific property rights, such as:
- Disposition: The ability to transfer ownership through sale or gift.
- Legal Action: The capacity to initiate proceedings against third parties infringing upon these rights.
- Security Interests: The potential for third parties to register security interests over cryptocurrencies as personal property.
Current Practices
In practice, Australians are increasingly engaging with cryptocurrencies in various legal and financial contexts. The active trading of digital currencies, such as Bitcoin, has become a significant aspect of the broader investment landscape, with individuals and businesses leveraging their value as a medium of exchange or as speculative assets. As cryptocurrency adoption grows, it is also being incorporated into trusts and estate planning. Many Australians are taking steps to declare their cryptocurrency holdings in trusts, ensuring proper management and succession, or including these assets in their wills to provide clear instructions for their distribution after death.
Additionally, the treatment of cryptocurrencies as assets in bankruptcy proceedings is becoming a topic of legal and financial importance. Trustees in bankruptcy are beginning to recognise and address cryptocurrency holdings as part of the debtor's estate, ensuring equitable treatment of creditors. These real-world applications underscore the importance of clarifying the legal status of cryptocurrency, as its role in personal and commercial transactions continues to evolve.
Conclusion
The legal recognition of cryptocurrency as property in Australia is evolving. Further court rulings will provide greater clarity around the legal recognition of cryptocurrency as property, aligning legal frameworks with current practices and ensuring that rights associated with personal property extend to digital assets.
If you have questions about risks or property rights related to crypto currency contact a member of our Intellectual Property + Technology team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
