UK High Court Rules Tether as Property Following New Regulations

The High Court of the United Kingdom has determined that the stablecoin Tether (USDT) is legally acknowledged as property under English law.

This ruling represents the first comprehensive trial judgment in the UK regarding the legal classification of cryptocurrency and follows the government’s recent introduction of new legislation designed to clarify the legal standing of cryptocurrencies.

The case involved a victim of fraud whose stolen cryptocurrencies, including Tether, were moved through various crypto exchanges after being laundered via crypto mixers.

USDT Recognized as Property, Court Determines

The court’s ruling to categorize Tether as property was part of a preliminary matter in the lawsuit initiated by the victim.

In the judgment issued on September 12, Deputy Judge Richard Farnhill of the High Court of Justice remarked that “USDT attracts property rights under English law.”

He further explained that Tether is “a distinct form of property not based on an underlying legal right” and is subject to tracing and trust claims, akin to other property types.

The judge also referenced a 2019 ruling from the same court, which supported the classification of cryptocurrencies as property, although that case did not proceed to trial.

This ruling is consistent with the 2023 report from the England and Wales Law Commission, which similarly classified digital assets as property.

The case was brought forth by fraud victim Fabrizio D’Aloia, who aimed to recover stolen assets, including 400,000 USDT that had been traced to the Thai crypto exchange BitKub.

However, D’Aloia was unable to persuade the court that BitKub had been “enriched” by receiving 46,291 USDT allegedly traced from his stolen funds.

Judge Farnhill ruled that while D’Aloia had indeed been a victim of fraud, he could not definitively prove that BitKub had received his Tether due to the involvement of crypto mixers, which obscured the flow of funds.

Nicola McKinney, a partner at Quillon Law representing BitKub, clarified that the judge recognized the potential for identifying assets in mixed pools but concluded that D’Aloia had not provided adequate evidence linking his USDT to BitKub’s wallet.

The ruling highlighted the necessity of clear, well-documented evidence when asserting claims related to cryptocurrency transactions.

UK Introduces Crypto Legislation

This decision comes just one day after the UK government unveiled 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 country’s property laws.

The UK has been among the nations that have intensified regulatory efforts following several high-profile bankruptcies last year.

The Financial Conduct Authority (FCA) supervises crypto activities, concentrating on anti-money laundering measures and consumer protection.

Last year, the FCA enacted new regulations requiring crypto firms to register with the financial regulator and obtain approval for their marketing materials from an FCA-authorized entity.

Key updates include exchanges providing clear warnings to customers regarding the risks associated with crypto investments.

The FCA has cautioned that non-compliance could lead to criminal charges, including unlimited fines and up to two years’ imprisonment, for both domestic and international exchanges operating in the UK.

Consequently, leading crypto exchanges Coinbase, Revolut, and Binance have updated their mobile and web applications to align with the new regulations.

The post UK High Court Declares Tether as Property in Ruling After New Regulations appeared first on Cryptonews.