Is Bitcoin actually property?

The Supreme Court of Victoria recently confirmed that Bitcoin is indeed property under Australian law. This is an important development that brings Australia in line with the law in the UK and other countries. 

Background

The decision in Re Blockchain Tech Pty Ltd [2024] VSC 690 concerned separate transfers of Bitcoins valued at several million dollars, with those Bitcoins allegedly either to be held under a bailment arrangement or to be used for working capital purposes. 

As part of a complicated series of transactions, the plaintiffs argued that they were still entitled to 36 Bitcoin that had been transferred to the defendant because the coins were held under the alleged bailment. They also argued that the defendant was required to account for the proceeds of the sale of other Bitcoins because some of the proceeds from that sale were allegedly misappropriated for the transferee’s personal expenses.

Analysis

At first glance, it might seem obvious that crypto assets are property. Indeed, the court’s finding that Bitcoin is property may have been predictable, as it was consistent with decisions in other countries as well as the majority of expert opinion. 

Nonetheless, the designation of crypto assets as property – as opposed to merely data or some other collection of rights – is significant.

This is because a number of legal structures and remedies turn on whether the subject matter or asset in question is “property”. 

For instance, trusts will fail if there is no trust property or the trust property is uncertain. Therefore, prior to this decision, it was arguable that a trust could not be established where the trust property only included crypto assets. 

Further, the confirmation that Bitcoin is property expands the scope of remedies for parties who are attempting to recover or trace misappropriated crypto assets. It should be noted, however, that an argument that disputed crypto coins were held under bailment (as argued in Re Blockchain) is unlikely to succeed as the concept of bailment does not extend to intangible property.

Contact our team for further assistance with cryptocurrency.

Disclaimer: This is general advice only and has not been prepared with your situation and needs in mind.