In a landmark ruling on Tuesday, the Singapore High Court officially recognized cryptocurrencies as properties capable of being held on trust. The case involved Seychelles-based cryptocurrency exchange Bybit and a former contractor, Ho Kai Xin. Bybit brought the legal action against Ho Kai Xin, alleging that she had violated her employment contract by exploiting her position to transfer over 4.2 million USDT (a stablecoin issued by Tether) to addresses under her control, and also moved a quantity of fiat currency to her personal bank account.
Presided over by Judge Philip Jeyaretnam, the case garnered significant attention from the crypto community and legal experts alike due to its implications on the treatment of cryptocurrencies in the eyes of the law. The judge’s ruling was based on the notion that, much like any other form of property or asset, cryptocurrencies, including USDT, can be held on trust.
Judge Jeyaretnam’s decision referred to a public consultation response that had been published by the Monetary Authority of Singapore on July 3, 2023. This response acknowledged the practicality of identifying and segregating digital assets, lending further support to the argument that they can be held on trust.
Furthermore, the ruling recognized that holders of crypto assets possess an incorporeal right of property that is recognized by the common law as a thing in action, thus making it enforceable in a court of law. The judge did acknowledge that there might be an “element of circularity” in this conclusion, but he emphasized that it was not dissimilar to how the legal system approaches other social constructs, such as traditional forms of currency like fiat money.
Judge Jeyaretnam drew an intriguing parallel between the value of cryptocurrencies and that of more traditional forms of currency, stating, “It is only because people generally accept the exchange value of shells or beads or differently printed paper notes that they become currency.” He pointed out that the inherent value of any object, whether it’s a physical item like shells or an intangible digital asset like crypto, is not fixed and is determined by societal consensus.
The judge’s nuanced understanding of the nature of value in the context of cryptocurrencies serves as a thought-provoking insight for those who may be skeptical about the worth of these digital assets. While cryptocurrencies might not have inherent value in and of themselves, their value is derived from the belief and trust placed in them by their users.
This groundbreaking ruling by the Singapore High Court marks a significant step forward in the legal recognition and treatment of cryptocurrencies. As the crypto industry continues to evolve and mature, such legal precedents will play a crucial role in shaping the future of how digital assets are handled and protected under the law.
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