In a groundbreaking ruling, cryptocurrencies have been officially recognized as property capable of being held on trust, marking a pivotal moment for the digital asset industry. Judge Philip Jeyaretnam of the High Court of Singapore delivered this landmark decision on July 25 in a case involving ByBit and its former employee, Ho Kai Xin, who was accused of transferring approximately 4.2 million USDT from the crypto exchange to her private accounts. The court not only ordered Ho to return the funds to ByBit but also made a momentous statement on the legal status of cryptocurrencies. This historic verdict holds profound implications for the treatment of digital assets and bolsters the industry’s legitimacy in the eyes of the law.

Cryptocurrencies as “Things in Action”

In his ruling, Judge Jeyaretnam classified cryptocurrencies, including the stolen USDT, as “things in action.” This classification, rooted in British common law, refers to a type of property where personal rights can be claimed or enforced through legal action, irrespective of physical possession. The court’s recognition of digital assets as “things in action” establishes a crucial precedent, acknowledging that value can be derived from cryptocurrencies despite their lack of physical form.

The Role of Human Perception and Faith

Judge Jeyaretnam further emphasized that the value of cryptocurrencies is intricately linked to human perception and faith. While these assets exist in a digital realm, their worth is derived from the trust and belief placed in them by individuals and communities. This perspective sheds light on the intangible nature of cryptocurrencies and validates their status as legitimate property in the eyes of the law.

MAS Consultation Paper and Segregation of Digital Payment Tokens

The Judge’s ruling also referenced the consultation paper by the Monetary Authority of Singapore (MAS), which outlines plans to implement segregation and custody requirements for digital payment tokens. This aligns with the court’s view that if digital assets can be effectively identified and segregated in practice, they can indeed be held on trust. The MAS consultation paper plays a crucial role in shaping the regulatory landscape for cryptocurrencies in Singapore and beyond.

Cryptocurrencies Under “Movable Property” Definition

Judge Jeyaretnam’s decision highlighted Order 22 of Singapore’s Rules of Court 2021, which specifically includes cryptocurrencies under the definition of “movable property.” This classification reinforces the court’s position that cryptocurrencies possess characteristics of property and can be subject to legal protections and remedies.

Global Precedents: London’s NFT Ruling

It is worth noting that the recent ruling in Singapore is not an isolated event. In May 2022, the High Court of Justice in London also set a precedent by recognizing non-fungible tokens (NFTs) as “private property.” This decision provided a sense of security and property rights protection to NFT investors within the British legal system.

Conclusion: A Defining Moment for the Digital Asset Industry

Judge Jeyaretnam’s landmark ruling has provided much-needed clarity and legitimacy to the status of cryptocurrencies as property held on trust. By classifying digital assets as “things in action” and recognizing their value derived from human perception and faith, the court has opened the door to a new era for the digital asset industry. The decision aligns with global efforts to establish comprehensive regulatory frameworks for cryptocurrencies and offers investors and stakeholders a sense of confidence in navigating the evolving landscape of digital finance. As this defining moment resonates across jurisdictions, the legal recognition of cryptocurrencies as property sets the stage for further growth and acceptance of digital assets in the mainstream economy.