UK Courts and Crypto: Recent Legal Developments

As digital assets and cryptocurrencies become more embedded in commercial activity, UK courts are shaping how they're treated under the law. Our Commercial Disputes team explores key rulings recognising crypto as property and the evolving questions around fiduciary duties. A must-read for anyone tracking legal developments in crypto or anticipating how Irish courts may respond.

What you need to know

• UK courts now recognise digital assets as property, meaning owners can enforce rights over them, including in cases of fraud or theft.

• Recognition of property status gives crypto owners stronger legal protection, including rights enforceable against third parties, not just those they deal with directly.

• The courts are starting to explore duties owed by developers and exchanges, though no final decision has been made yet on whether fiduciary duties apply.

• The UK’s approach continues to evolve, with courts signalling that anything with real commercial value could be treated as property.

• Irish courts have yet to weigh in, but the UK’s direction may influence future rulings in Ireland, especially around constitutional property rights.

The legal treatment of digital assets and cryptocurrencies by UK courts has evolved significantly in recent years as they have become more prominent in commercial and financial activities. By adapting and applying common law principles, the UK courts are increasingly willing to recognise digital assets and cryptocurrencies as property. This has resulted in owners being able to assert enforceable property rights over these assets.

Similar issues concerning ownership have yet to be litigated before the Irish courts. In the meantime, however, it is useful to review how the treatment of all things crypto has evolved before the UK courts when attempting to forecast what approach the Irish courts might take to digital assets.

Background

The principle that cryptocurrencies can be treated as property was firmly established in the UK Jurisdiction Taskforce’s (UKJT) legal statement of 2019. The statement affirmed that crypto assets satisfy the criteria of property under common law. This was confirmed in the decision of National Provincial Bank v Ainsworth. and was later reinforced by the High Court in the subsequent case of AA v Persons Unknown, which recognised Bitcoin as property capable of being the subject of an injunction.

Significance

The importance of this recognition by the UK courts is that property rights are enforceable as against third parties, and not just an individual with whom the owner of crypto assets has a contractual relationship. Given the prevalence of fraud and scams involving the theft of cryptocurrencies, this is significant as it means your rights as an owner of crypto assets are enforceable against third parties who may acquire your crypto assets from the fraudsters who initially stole the assets from you.

The more recent case of Tulip Trading v Bitcoin addressed a further important legal question: whether software developers who manage cryptocurrency exchanges owe fiduciary duties to cryptocurrency owners. Initially, the UK High Court dismissed the case, ruling that software developers do not owe fiduciary duties to cryptocurrency owners. However, the Court of Appeal later overturned that decision, stating that there was a serious issue to be determined regarding whether developers and/or crypto exchanges could owe a duty to act in the best interests of cryptocurrency holders. The ruling did not establish a definite duty but acknowledged that the question merits further legal scrutiny. Further legal scrutiny before the UK courts, or indeed the Irish courts, has yet to offer up a definitive judgement.

In a later case, Boonyaem v Persons Unknown, the Court said the law should start treating anything with real commercial value as property – a sign of the UK’s changing approach to digital and crypto assets.

Comment

The UK courts have made significant strides in adapting common law principles to digital assets and cryptocurrencies. Cases like Tulip demonstrate the courts' willingness to engage with complex issues surrounding crypto asset governance. As the legal landscape evolves, further judicial clarification is expected, particularly regarding fiduciary responsibilities and the duties owed by the exchanges that host cryptocurrencies.

These issues have yet to be explored before the Irish courts, and it will be interesting to see if the Irish courts are willing to go as far as recognising crypto assets as property, which would afford such assets the protection of the Irish Constitution under Article 43.

In Ireland, it is very much a case of “watch this space”.

For more information and expert advice, contact a member of our Commercial Disputes team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.