ABSTRACT
The emergence of digital assets, facilitated by new technologies, has posed a challenge to both commercial and insolvency laws. Specifically, ascertaining property rights in such assets has become necessary to enhance their economic value and their use in finance, as well as in order to determine existing rights in an insolvency. In the latter context, one issue between parties to a commercial transaction relating to a digital asset is to whom the asset or any right therein belongs. Another issue relates to the legal underpinning of holding digital assets for customers. In this context, generally speaking, the question is whether third-party exchanges hold digital assets for customers as ‘virtual bailees’ or as debtors. If the former, the digital assets belong to the customers and title thereto does not vest in the trustee in bankruptcy for the benefit of the exchanger’s creditors. If the latter, the digital assets belong to the exchanger, who, similarly to a banker, merely owes their value to the customer. In this case, title thereto vests in the exchanger’s trustee in bankruptcy for the benefit of the trustee’s creditors.
Geva, Benjamin, Property Rights in Digital Assets under Uniform State Laws in the United States (March 20, 2025), Osgoode Legal Studies Research Paper Forthcoming.
Leave a Reply