ABSTRACT
… This paper argues that the most likely (default) relationship between a crypto-asset intermediary and a client is one of trustee and beneficiary, although there are also other possible legal characterisations, namely outright title transfer, ‘quasi-bailment’, and mere obligations sounding in contract. Ultimately, in a particular case, the legal characterisation of the relationship, as well as the precise obligations undertaken by the intermediary, will depend on the client-intermediary agreement itself. In many cases it is difficult to determine whether a particular client-intermediary agreement gives rise to one type of legal relationship or another, but all turns on the interpretation of the agreement in accordance with settled principles of construction and characterisation. Furthermore, it is uncertain whether the law will develop in a way such that bailment analysis will be accepted in the context of crypto-assets, for the objections relating to possession, transmission and (possibly) exclusivity would need to be surmounted before the concept can be applied. In the final analysis, it is concluded that the most likely type of legal relationship that would appear in practice is the trust, because this accords with the objective intention of the parties who wish to have commercial certainty, and (possibly) wish to comply with the relevant regulatory requirements within the particular jurisdiction in question.
Gullifer, Louise and Chong, Henry and Liu, Hin, Client-Intermediary Relations in the Crypto-Asset World (September 23, 2020). University of Cambridge Faculty of Law Research Paper No 18/2021.
First posted 2021-04-23 08:30:50
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