Who owns your crypto?

When crypto exchange 'Knaken' was declared bankrupt this summer, its many clients faced an uncomfortable question: did they ever actually own the crypto-assets they invested in?

The answer to this question is of crucial importance when it comes to their position in the insolvency proceedings. Are they owners with a claim to specific assets, or merely creditors standing in line with everyone else? Courts elsewhere have already answered in the affirmative in relation to exchange collapses in the US (Celcius) and in Italy (BitGrail). In Japan, the courts rejected the possibility of ownership. Its parliament, however, subsequently decided that crypto-assets should be subject to ownership and the law was amended (MtGox).

Under Dutch property law, the answer whether crypto-assets are subject to ownership has traditionally been answered with no, but new European legislation may have changed that. This blog examines the question of whether crypto-assets are subject to ownership and asks if this would be desirable or not. 

What qualifies as things?

Under the Dutch Civil Code (DCC) only ‘things’ (zaken) can be subject to ownership. To be considered a thing, an asset must be: (i) corporeal; (ii) an object; and (iii) subject to human control (Art. 3:2 DCC). Corporeal means something is tangible and perceptible: electricity, for instance, is not considered a thing because you cannot touch or see it.