In April 2020, as global markets grappled with the economic uncertainty brought on by the COVID-19 pandemic, Bitcoin’s price rebounded above $10,000. Investors increasingly viewed Bitcoin and other cryptocurrencies not just as speculative assets, but as alternative stores of value—digital gold in times of financial turbulence.
Interestingly, beyond their financial implications, Bitcoin and the pandemic share a deeper conceptual parallel: both are unwelcome and indeterminate in societal and systemic terms. While the former label speaks for itself, the latter—indeterminacy—resonates across disciplines. Philosophers like Jacques Derrida have questioned the biological and metaphysical status of viruses; similarly, in legal theory, the classification of Bitcoin remains unresolved. This article explores the evolving legal definition of Bitcoin, particularly within the framework of common law, and examines whether it can be recognized as property.
The Common Law Framework: Chattels vs. Choses in Action
Under traditional common law, all personal property falls into one of two categories: chattels (tangible items that can be physically possessed) or choses in action (intangible rights enforceable through legal proceedings, such as debts or shares). As stated in Colonial Bank v Whinney [1885] 30 Ch D 261, “All things not land are either ‘chattels’ or ‘choses in action.’ The law knows no third category.”
At first glance, Bitcoin does not neatly fit into either category. It is not a chattel, because it is intangible and cannot be physically possessed. It is also not a chose in action, because it does not represent a legal right enforceable by litigation—there is no debtor-creditor relationship or contractual obligation tied to its ownership. This has led some to argue that cryptocurrency exists in a legal gray area, falling outside established property classifications.
However, this rigid dichotomy is increasingly being challenged.
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Breaking the Binary: The UK Legal Statement on Crypto-Assets
A turning point came with the November 2019 Legal Statement on Crypto-Assets and Smart Contracts issued by the UK Jurisdiction Taskforce (UKJT). This landmark document provided much-needed clarity and was instrumental in the English High Court’s decision in AA v Persons Unknown [2020] EWHC 3556 (Comm).
In that case, Mr. Justice Bryan referenced key paragraphs from the UKJT report:
“77. We do not consider that Colonial Bank should be taken as limiting the scope of what can be property in law. If anything, it shows the common law’s ability to extend traditional definitions and concepts to accommodate new commercial practices (such as the development of company shares).”
“83. Several major 20th-century statutes define property to include choses in action and ‘other intangible property.’ The Theft Act 1968, Proceeds of Crime Act 2002, and Fraud Act 2006 all include such language. These may be purposive definitions, but they indicate that there is no conceptual barrier to treating intangible things as property—even if they are not choses in action.”
Crucially, the report highlighted that the UK’s Patents Act 1977 explicitly classifies patents as personal property that are neither chattels nor choses in action. This precedent demonstrates that common law systems can recognize new forms of property beyond the traditional binary.
Based on this reasoning, Bryan J concluded that while crypto-assets may not qualify as choses in action under a narrow definition, they can still be treated as property. He affirmed: “Cryptocurrencies are, in principle, property.”
Implications for Hong Kong Law
Hong Kong follows common law principles closely aligned with those of England. While there have been no definitive local rulings on the property status of Bitcoin as of this writing, Hong Kong courts have taken a pragmatic approach—particularly in granting Mareva injunctions (freezing orders) in cryptocurrency fraud cases.
Moreover, Hong Kong’s Theft Ordinance (Cap. 210) and Patents Ordinance (Cap. 514) mirror their UK counterparts in defining property broadly to include intangible assets. Given this legislative similarity and the persuasive authority of AA v Persons Unknown, it is highly likely that a Hong Kong court would recognize Bitcoin as property.
Yet, certainty remains elusive.
The Limits of Legal Recognition
While Bitcoin—the most prominent decentralized cryptocurrency—can arguably be classified as property due to its scarcity, transferability, and market value, the same cannot be automatically said for all tokens. Many crypto assets derive value from external mechanisms or grant access to services (so-called “utility tokens”). These may resemble securities or contractual rights more than pure property.
For such tokens, legal recognition may require legislative intervention—particularly amendments to securities and financial regulations. As noted in the Swiss Federal Council’s December 2018 report on blockchain technology, regulatory frameworks must evolve to distinguish between asset types and apply appropriate oversight.
Thus, while Bitcoin’s status edges toward clarity, the broader crypto ecosystem remains legally indeterminate.
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Frequently Asked Questions
Q: Is Bitcoin legally recognized as property in Hong Kong?
A: While no final court ruling exists, Hong Kong’s legal framework and judicial trends strongly suggest that Bitcoin would be treated as property, especially following persuasive precedents like AA v Persons Unknown.
Q: Can you sue someone for stealing your Bitcoin?
A: Yes. If Bitcoin is recognized as property, unauthorized taking constitutes theft or conversion, and victims can seek remedies such as injunctions or damages.
Q: What’s the difference between a chattel and a chose in action?
A: A chattel is a physical object you can possess (like a phone); a chose in action is an intangible right enforced by law (like a bank debt). Bitcoin fits neither perfectly but may still qualify as property.
Q: Are all cryptocurrencies treated the same under the law?
A: No. Legal treatment depends on function. Bitcoin is more likely to be seen as property, while utility or security tokens may fall under financial regulations.
Q: Why does legal classification matter for crypto?
A: It affects enforceability of rights, taxation, inheritance, insolvency proceedings, and regulatory compliance—making clear classification essential for mainstream adoption.
Q: Could Hong Kong pass specific laws for crypto assets?
A: Absolutely. As seen globally, dedicated regulatory frameworks (like licensing regimes for exchanges) enhance legal certainty and investor protection.
Conclusion
The legal journey of Bitcoin mirrors its technological one—disruptive, boundary-pushing, and transformative. Though once dismissed as legally unclassifiable, it now stands at the threshold of formal recognition as property under common law.
Hong Kong, with its robust legal system and financial innovation ambitions, is well-positioned to affirm this status decisively. But broader questions remain open, especially regarding newer token models and decentralized finance applications.
As lawmakers and courts continue to adapt, one thing is clear: the indeterminacy surrounding digital assets will gradually give way to structured legal frameworks—one precedent at a time.
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