The United Kingdom High Court recently ruled that the stablecoin Tether (USDT) is legally recognized as property under English law, marking the first full trial judgment in the UK on the legal status of cryptocurrency. This decision comes shortly after the introduction of new legislation aimed at clarifying the legal status of cryptocurrencies in the country. The case involved a fraud victim whose stolen cryptocurrencies, including Tether, were transferred through various crypto exchanges after being laundered through crypto mixers.
In the ruling delivered by Deputy Judge Richard Farnhill of the High Court of Justice on September 12, it was stated that Tether attracts property rights under English law. The judge further explained that Tether is a distinct form of property that is subject to tracing and trust claims, similar to other types of property. This decision aligns with a 2019 judgment from the same court, which also supported the classification of cryptocurrencies as property, although that case did not go to trial.
The case was brought by fraud victim Fabrizio D’Aloia, who sought to recover stolen assets, including 400,000 USDT that had been traced to the Thai crypto exchange BitKub. However, D’Aloia was unable to prove in court that BitKub had been enriched by receiving USDT traced from his stolen funds due to the use of crypto mixers that obscured the flow of funds. The ruling emphasized the importance of clear, well-documented evidence when making claims involving cryptocurrency transactions.
The UK government introduced a new bill aimed at clarifying the status of digital assets, including non-fungible tokens (NFTs), cryptocurrencies, and carbon credits, as “things” and “personal property” under the nation’s property laws. This move reflects the country’s efforts to regulate digital assets following some high-profile bankruptcies last year. The Financial Conduct Authority (FCA) oversees crypto activities, focusing on anti-money laundering measures and consumer protection. The FCA has implemented new rules requiring crypto firms to register with the regulator and ensure compliance with marketing materials.
Leading crypto exchanges such as Coinbase, Revolut, and Binance have updated their mobile and web applications to comply with the new regulations in the UK. Failure to comply with the FCA’s regulations can result in criminal charges, including unlimited fines and up to two years’ imprisonment for both domestic and overseas exchanges operating in the UK. The ruling and the introduction of new legislation underscore the importance of clear guidelines and evidence when dealing with cryptocurrency transactions, providing clarity and legal recognition to digital assets in the UK.
