The American Answer to Crypto's Property Question

The rise of digital assets, such as cryptocurrencies, stablecoins, NFTs, and memecoins has confronted legal systems worldwide with a fundamental challenge. Are these assets property? If so, how do they fit within existing personal property taxonomies? And what rules should govern their circulation in commerce? We refer to this tripartite inquiry collectively as ‘the Property Question.’

Courts across several common law jurisdictions have examined these issues relying on the indicia formulated by Lord Wilberforce in National Provincial Bank Ltd v Ainsworth, concluding that digital assets are property—though this position has faced scholarly critique. Beyond this initial determination, however, these jurisdictions have become entangled in classification debates. The Law Commission of England and Wales advocates categorizing digital assets as a novel tertium quid additional to the traditional choses in possession/action dichotomy. In Australia, by contrast, the Supreme Court of Victoria courts have classified them as choses in action. Notably, as highlighted by scholars, this taxonomical preoccupation has diverted attention away from critical issues regarding their commercial circulation, such as the rights of good faith purchasers and their use as collateral in secured transactions.

Our recent paper provides the first comprehensive analysis of how the Property Question is answered in American law. Using a comparative lens, we examine how U.S. courts and legislators have determined whether digital assets constitute property and where they fit within the existing personal property framework. Our analysis reveals a distinctly American approach—one that has largely bypassed theoretical classification questions in favor of developing a functional regime for commercial transactions involving digital assets.

The Evolution of American Personal Property Law

We suggest that this divergence between the United States and other common law jurisdictions reflects a deeper transformation in American personal property law. Over the course of the 20th century, in the United States, the importance of traditional common law classifications for personal property has waned. This evolution has been driven primarily by the Uniform Commercial Code (UCC), which has progressively introduced a new taxonomy organized around commercial utility and market practices.

UCC Article 9 exemplifies this shift. Rather than adhering to the traditional classifications, Article 9 created a new schema for different types of collateral—such as ‘accounts’, ‘chattel paper’, ‘deposit accounts’, ‘goods’, ‘general intangibles’, and ‘investment property’—with distinct rules for creation, perfection, and priority of security interests. This functional approach prioritized commercial utility and pragmatism over doctrinal coherence, establishing itself as a distinctly American innovation that diverged significantly from secured transactions frameworks in other common law jurisdictions.

The 2022 UCC Amendments: Pragmatic Functionalism

The 2022 UCC Amendments embody the most recent incarnation of this American approach. Confronted with digital assets that defy traditional classifications, the drafters created a new category of personal property—'controllable electronic records’ (CERs)—built around the novel concept of ‘control.’ This solution sidesteps theoretical conundrums, catering instead to the distinctive characteristic of digital assets: the ability of a person to exercise exclusive powers over the asset through technological means, without having to rely on intermediaries. These definitions are deliberately crafted to accommodate how digital assets are used and valued by market participants, rather than forcing them into historical personal property categories.

The 2022 UCC Amendments also introduce a ‘take free’ rule for ‘qualifying purchasers’—those who obtain control of a CER for value, in good faith, and without notice of competing claims. This rule effectively clothes CERs in the mantle of negotiability, reducing title inquiry burdens and, in turn, ownership disputes. For secured transactions, the amendments establish specialized rules for creation, perfection, and priority of security interests in CERs. Most significantly, they permit perfection through control, and grant control-perfected security interests priority over those perfected by other methods (such as by filing), which directly respond to market demands.

The approach of American personal property law to digital assets may appear complex and fragmented, lacking the doctrinal elegance sought by other common law systems. Yet this pragmatic functionalism achieves something quite valuable: increased legal certainty and alignment with stakeholders’ expectations.

Beyond Digital Assets

Our research provides the first systematic treatment of how American law resolves the Property Question for digital assets. It also illuminates a broader pattern in the evolution of American personal property law—the gradual shift away from traditional common law categories toward functional classifications shaped by commercial needs and market practices.

These insights also offer guidance for how future intangible personal property might be integrated into American personal property law. As novel asset classes emerge, such as verified carbon credits, similar function-oriented approaches are likely to be favored by courts and lawmakers.

The author’s complete paper can be found here.

Andrea Tosato is a Professor of Law at the Southern Methodist University Dedman School of Law.

Christopher K. Odinet is a Professor of Law & Mosbacher Research Fellow at the Texas A&M University School of Law.