In an Australian first, the Supreme Court of Victoria has aligned itself with other common law jurisdictions including the UK, New Zealand and Singapore in determining that Bitcoin, and by extension, cryptocurrency, constitutes property.
The decision was handed down by Justice Attiwill in Re Blockchain Tech Pty Ltd [2024] VSC 690.
In this case, the plaintiff alleged that 36 Bitcoin, valued at more than $5 million AUD, was transferred to the defendant under a bailment agreement. The plaintiff sought possession of these assets, asserting that 25 additional Bitcoin were transferred to an exchange to be dissipated for working capital but were misappropriated by the defendant.
Key Findings
In arriving at its decision, the Court considered various judgements from other common law jurisdictions including the UK, New Zealand and Singapore.
The Court followed closely the common law test set out in the UK case of National Provincial Bank Ltd v Ainsworth [1965] UKHL 1. That case reasoned that property existed when four criteria were met.
These criteria are that property must be:
- Identifiable by subject matter;
- Identifiable by third parties;
- Capable of assumption by third parties; and
- Have some degree of permanence or stability.
On application of each of these criteria (at paragraphs 384 to 388 of the judgement) the Court found that Bitcoin satisfied each of the criteria set out in Ainsworth:
- Identifiable by subject matter – "The thing is Bitcoin. It is an electronic coin…an interest in Bitcoin is identifiable but not the identity of the person who has the interest". [384]
- Identifiable by third parties – "…the public key identifies an address of Bitcoin at that address on the shared public ledger. A person has the power to control and deal with the Bitcoin and to exclude third parties from accessing or dealing with it". [385]
- Is capable of assumption by third parties – "although a Bitcoin transfer transaction does not involve the ‘transfer’ of a person’s interest in the Bitcoin, this does not mean that an interest in Bitcoin is not property. This is because alienability is not an indispensable attribute of property. Bitcoin are also the subject of very active trading markets, including cryptocurrency exchanges, throughout the world, including in Australia". [387]
- Has some degree of permanence or stability – "Bitcoin are recorded on the shared public ledger… Bitcoin are held at a certain digital address. Bitcoin remain stable at the address until there is a transaction concerning those Bitcoin… Upon a transaction concerning Bitcoin, the number of Bitcoin at the owner’s address is reduced and the number of Bitcoin at the next owner’s address is increased". [386]
The Court also applied a fifth test at paragraph [388]. It distinguished Bitcoin from a person’s mere interest in information, because Bitcoin includes the power to undertake transactions on a network by use of a public key and a private key and also has the power to exclude third parties from accessing or dealing with the Bitcoin.
Implications
The decision clarifies the position on the proprietary characteristics of Bitcoin and cryptocurrency in Australia and aligns itself with the position adopted by other common law jurisdictions. It also strengthens the rights of Bitcoin holders and expands the remedies available to those needing to recover misappropriated cryptocurrency.