Chapter 17 Answer guidance to end of chapter questions

1. Do Bitcoins constitute property? Why or why not?

This is an interesting question.

  1. The obvious starting point for discussion is Elena Vorotyntseva v Money-4 limited & Ors in which Birss J found that there was no suggestion that cryptocurrency cannot be a form of property or that a party amenable to the court’s jurisdiction cannot be enjoined from dealing in or disposing of it.
  2. This was confirmed in AA v Persons Unknown where Bryan J gave a detailed decision on why cryptocurrencies should be treated as property under English law. This is the leading case and should as a result be thoroughly engaged with.
  3. The third case to be dealt with is Fetch.ai Ltd v Persons Unknown which also examined the jurisdictional elements.
  4. Basing a discussion on AA v Persons Unknown and the report of the UK Jurisdictional Task force, students should examine the reasons why or why not we might want to treat Bitcoins as property in particular what it might mean for tracing or for injunctions.

2. What would be the legal or practical implications if digital assets were possessable under the law of England and Wales?

To answer this question I would expect the student to discuss in order:

  1. The series of cases looking at the proprietary nature of digital assets including the three bitcoin cases in England, AA v Persons Unknown, Vorotyntseva v Money-4 limited, and Fetch.ai Ltd v Persons Unknown. Cases from other jurisdictions such as B2C2 v Quoine and Ruscoe v Cryptopia Ltd should also be acknowledged.
  2. Specific cases on cryptoassets should be examined including Osbourne v Persons Unknown.
  3. The analysis now switches to the Law Commission consultation and the nature of digital assets. In particular the recognition that Colonial Bank v Whinney only allows for two forms of property – things in action and things in possession.
  4. As digital assets seem to be neither of the traditional forms of property are they a tertio? The Law Commission, like the UKJTF seem to be moving towards a third category for digital assets. Students should discuss the implication of this.
  5. Finally is there a way that rivalrousness as allowed for in NFTs and other recorded assets recorded on chain could be a substitute for posessablity under English law? Could these assets be a form of thing in possession? Is this a way forward for the Law Commission?

3. Is it now time to formally bring cryptocurrency within the framework of the Electronic Money Regulations? Advise the UK Government on what you see as being the key provisions of a model Cryptocurrency Act.

To answer this question I would expect the student to discuss in order:

  1. What cryptocurrency is. This would involve a discussion of PKE encryption and blockchain to explain how a peer-to-peer currency, which has no central issuer, can be secure and can guard against double spending.
  2. The current legal position of cryptocurrency under the existing laws including the Electronic Money Directive 2009, the Currency and Bank Notes Act 1954, the Coinage Act 1971 and the Banking Act 2009.
  3. The student should discuss whether the current requirement that electronic money have an issuer under Art.2(2) of the Electronic Money Directive is outdated given blockchain technology.
  4. A discussion of the structure of a possible Cryptocurrency Act.
Back to top