N.b. that this discussion invokes some concepts from the common law of Great Little Britain and its whilom colonies. Legal concepts and technicalities may significantly differ in non-common-law jurisdictions, such as in Continental Europe’s civil law jurisdictions.
I take the position that
Bitcoin is a bearer asset. And though I can’t be sure without reading the opinion, from the short description in OP, it appears there is a legal nuance that others have missed here:
Today 8 April 2020 Justice Gendall delivered his judgement, finding firstly cryptocurrencies are “property” within the definition outlined in s2 of the Companies Act 1993 and secondly that account holders cryptocurrency were held on multiple trusts, separated by individual crypto-asset type. This means that the cryptocurrencies are beneficially owned by the account holders and are not assets of the company.
Bearer assets such as cash, gold bullion, or old-fashioned bearer bonds
can be held in trust for the benefit (“beneficial ownership”) of another. This neither changes the nature of the bearer asset, nor absolves the trustee of legally enforceable fiduciary duties to the beneficiary. Much as I can tell from the above snippet, the judge in this case
seems to have imposed a
constructive trust on the coins.
The word “beneficial” is key here! A
beneficial owner is not necessarily the
titular owner. On my educated guess from reading between the lines, I think that the court in this case seems to have ruled (or at least strongly implied) that, in substantial effect, possession of the keys is
titular ownership. The gravamen of the ruling would thus concur with I have been saying all along:
If you are a custodial exchange, etc., then you may be holding title to that Bitcoin as a nominee, or (quite arguably) a bailee, or some other legal concept which may be logical to apply. However, account-holders at custodial exchanges are not the titular owners of any Bitcoin at all, in my opinion. If you don’t have the private keys, then it is not your Bitcoin: It is somebody else’s Bitcoin; and that somebody else, the titular owner of the Bitcoin, has contractually agreed to let you excercise beneficial ownership of some sort.
My suggestion of a contract-law theory would be legally distinguishable from the apparent trust-law theory in this judge’s ruling; but it would have a similar practical effect. It is fully compatible with the “not your keys, not your coins” Bitcoin
Weltanschauung.
To forum users, the nature of the argument may be more obvious if you consider the PGP-signed obligations of a forum escrow agent. The escrow agent is holding the coins. The coins are not, however, an “asset” of the escrow agent, but rather, a liability. (It is why escrow agents get paid fees...)
If an escrow agent betrays his duties, then—well, good luck retrieving the coins with red-trust “judgments”! —Similarly in different degree as for court judgments against insolvent exchanges. That is the meaning of “not your keys, not your coins.”
any statutory precedent is meaningless if it cannot be enforced (and hence such things are in no way any kind of law at all).
Technical nitpick, because I am technical: As you subsequently seem to imply, it is a judicial precedent, not statutory.Much though I am sympathetic to this statement in principle, there will always be tension between the desires of those who would govern, and the practical limitations on their power.
Bitcoin directly exploits this tension. In an era when governments and
their owners, the banks have been attempting to replace all bearer assets with
identity-based assets, Bitcoin’s nature as a bearer asset pushes us back toward the wiser, freer era of bullion, cash notes, and bearer bonds—with the added benefit that Bitcoin can be transferred around the world with the press of a button.
For better or for worse, courts
will attempt to adjudicate disputes over the allegedly
proper ownership of bearer assets. As you say, it comes down to a question of enforceability.
Possession is nine-tenths of the law. Always has been, always will be!
Possession of the keys equals possession of the coins. Bearer asset.Knowing Bitcoin private keys and in turn the blockchain enforcing their ownership are a law unto themselves, far more powerful than any judicial or statutory pronouncements. that was Satoshi's clear intention from the very start
I like.
It is the anarchy of those who love order, and impose order first on themselves: They who live by honour and not law. They must become laws unto themselves. [...] You are a law unto yourself. [...] Be your own authority.
Context stripped, because it’s funnier this way:Would you wander in and call HM Queen 'property'?
Or that Trump fella?
Do you really want to ask
me that question?
;-)Seriously, they are both property:
Both are owned by the banks. “HM Queen” of
Great Little Britain is property of the Bank of England, and the “President” of those whilom American colonies is property of the Federal Reserve. Both nominal owners negotiate the finer details of global
International governance through the
BIS,
IMF,
et al.Did you say “sovereign”? Sorry, that concept is obsolete—not
modern! Anyway...
Most important things imho:
* KYC will be needed in the claims process
* no private coins have been used to pay off debts (yet?)
* returns will be in crypto where possible (which is logical in light of the judgment in the OP)
* KYC = WTF
For the sake of argument, pretend that the judgment were about gold coins held in a depository that went bankrupt. Of course, it is logical that the gold itself should be returned—unless it could not be recovered. In the latter case, it would be better to attempt recovering
some value than none at all.
