Key Takeaways
- USDT is “a distinct form of property not premised on an underlying legal right, court said
- The new bill allows crypto owners to benefit from stronger legal protections against fraud and theft
In a significant move, the United Kingdom High Court has ruled that the stablecoin Tether (USDT) is legally considered property. This is the first ruling of its kind under English law following a full trial, marking a significant moment in the legal treatment of crypto assets.
The case revolved around a fraud victim whose stolen cryptocurrency, including USDT, was moved through various exchanges after being processed through crypto mixers. Deputy Judge Richard Farnhill of the High Court of Justice ruled on September 12, stating that “USDT attract property rights under English law.”
He added that USDT is “a distinct form of property not premised on an underlying legal right” and can be traced or treated as trust property, similar to other forms of assets.
This ruling aligns with the 2019 judgment from the same court, which established cryptocurrencies as property, though that earlier case did not go to trial. The judge also referenced the England and Wales Law Commission’s 2023 report, which classified digital assets as property under English law.
“We conclude that some digital assets are neither things in possession nor things in action, but that nonetheless the law of England and Wales treats them as capable of being things to which personal property rights can relate,” the Law Commission’s report read
The court’s decision comes amid the UK government’s push to introduce new legislation aimed at formalizing the status of digital assets, including non-fungible tokens (NFTs) and cryptocurrency, as personal property. A bill introduced to Parliament on September 11 seeks to clarify that these assets will be categorized as “things” and personal property, offering clearer legal protections for owners against fraud and theft.
Commenting on the bill, Heidi Alexander MP, Minister of State at the Ministry of Justice, said: “Previously, digital belongings were not definitively included in the scope of English and Welsh property law – leaving owners in a legal grey area if their assets were interfered with.”
The bill also assists courts in resolving complex disputes, like the ones arising in divorce settlements or business agreements involving cryptocurrency and digital assets.