In a groundbreaking ruling on July 25, 2023, Judge Philip Jeyaretnam of the High Court of Singapore declared that cryptocurrencies are legally considered a form of property that can be held in trust. The ruling came in response to a case brought by ByBit against its former employee, Ho Kai Xin.
ByBit accused Kai Xin of transferring approximately 4.2 million USDT from the crypto exchange to her personal accounts. Following the legal proceedings, the court ordered Kai Xin, who had accused an absent cousin of managing the relevant accounts, to refund the entire amount to ByBit.
Judge Jeyaretnam categorized the stolen USDT and cryptocurrencies as property in his verdict. According to the Judge, there is no distinction between cryptocurrencies, fiat money, or even shells, as long as they possess value derived from collective trust, regardless of their physical nature.
To support his ruling, Judge Jeyaretnam referred to a public consultation paper published by the Monetary Authority of Singapore on July 3, 2023, which emphasized the practical feasibility of identifying and segregating digital assets.
Judge Jeyaretnam also likened the ever-changing nature of cryptocurrencies to a river’s flowing waters. He stated:
“This physical manifestation at the level of digital bits and bytes is not permanent and changes with every transaction. Nonetheless, we identify what is going on as a particular digital token, somewhat like how we give a name to a river even though the water contained within its banks is constantly changing.“
Furthermore, the Judge categorized cryptocurrencies under “things in action,” a term in British common law that refers to a form of property where personal rights can be asserted or enforced through legal means rather than relying on physical possession.
“Value is not inherent in an object,” Judge Jeyaretnam added, highlighting that the worth of crypto assets lies in the trust vested in them by their users, despite skepticism about their value.
This landmark ruling has significant implications for the legal status of digital assets. Though it clarifies the legal treatment of cryptocurrencies in Singapore, it may have far-reaching ramifications for digital asset regulations in other jurisdictions worldwide.
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