In many jurisdictions, virtual currencies are, at least in some contexts,
viewed to be a commodity, a form of property. Classification of digital currency as
property has substantial and far-reaching legal consequences. Digital currencies are now
traded through trading exchanges. Future contracts and other forms of financial
derivatives based upon virtual currencies are also bought and sold in marketplaces.
Enterprises such as LedgerX and TerraExchange are now seeking full regulatory
approval to permit them to function as authorized trading exchanges able to serve as
trading markets for a wide range of financial products. Recognition of digital currencies
as property has profound tax consequences. It makes digital currency potentially subject
to the laws of debtor/creditor relations when the currency is held as an asset. Digital
currency as property is subject to diverse laws including laws of wills, estates, and
trusts, when the currency is part of an individual’s personal estate. Laws and
international treaties governing foreign investment in assets are in some cases
applicable to trans-border purchase of virtual currency. Digital currency is already
widely viewed to be a form of property in many jurisdictions, and in that capacity, it is
currently potentially subject to a substantial and diverse set of rules addressing property
ownership and transfer.
Keywords: Asset, commodities, Commodities Future Trading Exchange (CFTC),
creditor, derivatives, financial instruments, foreign investment, future, intangible,
LedgerX, lien, Mt. Gox, OKCoin, property, tax, TeraExchange, trade agreements,
trading exchange, wills.
