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UK High Court Rules Tether as Property Post-New Regulations

AuthorSyed Ali Haider
Crypto News Author
Fact Checked by Joshua Downes
Last updated: September 13, 2024
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UK High Court Rules Tether as Property Post-New Regulations

Highlights:

  • The UK High Court recognized Tether (USDT) as property, marking a legal first for cryptocurrencies.
  • The ruling in the fraud case highlights the need for clear evidence in crypto disputes.
  • A new UK bill aims to classify digital assets as personal property, enhancing legal clarity.

The United Kingdom High Court has declared that the stablecoin Tether (USDT) is legally recognized as property under English law. This is the first time a UK court has fully addressed the status of cryptocurrency in a judgment following a trial.

The ruling originated from a case involving a fraud victim whose stolen cryptocurrency, including Tether, was transferred through various exchanges after being processed by crypto mixers. The High Court was asked to determine whether USDT could be classified as property under English law.

In his September 12 decision, Deputy Judge Richard Farnhill stated, “Under UK law, USDT attracts property rights.” He further described USDT as a “distinct form of property not based on an underlying legal right,” which makes it subject to tracking and capable of constituting trust property like other assets.

Farnhill pointed to a “strong line of authority” recognizing cryptocurrencies as property, referencing a 2019 judgment from the same court, although it wasn’t made at trial. This view aligns with the 2023 England and Wales Law Commission report, which classified digital assets as property.

Case Background: Stolen Crypto and Legal Status

Fraud victim Fabrizio D’Aloia brought the case, who tried to recover stolen assets, including 400,000 USDT, traced to the Thai crypto exchange BitKub. However, D’Aloia failed to convince the court that BitKub received 46,291 USDT from his stolen funds, lacking sufficient evidence. Judge Farnhill ruled that although D’Aloia had been defrauded, he couldn’t prove that BitKub received his Tether.

Nicola McKinney, a partner at Quillon Law representing BitKub, said the judge acknowledged the potential to identify assets within mixed pools. However, the judge determined that D’Aloia had not provided enough evidence to link his USDT to BitKub’s wallet. The ruling underscored the need for clear, well-documented evidence when making claims related to cryptocurrency transactions.

UK Govt. Introduces Bill to Classify Digital Assets as Personal Property

The decision came just one day after the UK government introduced a new bill to Parliament to clarify the legal status of cryptocurrencies, tokenized real-world assets (RWAs), and non-fungible tokens (NFTs). This new legislation marks a significant shift in the UK’s digital finance management. Once enacted, it will recognize digital assets like cryptocurrencies as personal property, offering enhanced legal protection for owners.

The new legislation aims to provide essential legal clarity for the expanding field of digital assets. Previously, these assets were in a legal grey area under English and Welsh property law. This left owners vulnerable to scams, fraud, and ownership disputes.

The UK has increased regulatory efforts after last year’s high-profile bankruptcies. The Financial Conduct Authority (FCA) now oversees crypto activities, emphasizing anti-money laundering and consumer protection. Recently, the FCA introduced rules requiring crypto firms to register and get their marketing materials approved.

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