In today’s rapidly evolving digital economy, the legal classification of virtual assets has become a pivotal issue for lawmakers, legal practitioners, and investors alike. While many users focus solely on trading or investing in cryptocurrencies, few pause to consider their foundational legal status. For legal professionals, however, understanding how virtual assets are categorized under civil and financial law is not just academic—it shapes enforcement, ownership rights, inheritance, and regulatory compliance.
This article explores the current legal positioning of virtual assets, particularly within the framework of property law, and proposes a forward-looking approach to classifying them as movable property under civil codes. We’ll examine international definitions, judicial precedents, and legislative developments—culminating in actionable recommendations for legal reform.
What Are Virtual Assets? Defining the Digital Frontier
The term virtual assets has gained global traction since the Financial Action Task Force (FATF) introduced its standardized definition in 2018. According to FATF, a virtual asset refers to:
"A digital representation of value that can be digitally traded or transferred and used for payment or investment purposes."
Notably, this definition excludes traditional fiat currencies, securities, and other regulated financial instruments already covered under existing frameworks. It encompasses cryptocurrencies like Bitcoin and Ethereum, utility tokens, non-fungible tokens (NFTs), and other blockchain-based digital representations of value.
FATF’s earlier 2014 report on Virtual Currency further clarifies that such currencies function as:
- A medium of exchange,
- A unit of account,
- A store of value,
but do not possess legal tender status in any jurisdiction.
This distinction is crucial: while virtual currencies operate like money in practice, they are not recognized as official currency by governments. Instead, they exist in a regulatory gray zone—neither fully property nor currency in most jurisdictions.
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Global Legal Developments: The Case of Wyoming’s Digital Asset Law
One of the most significant legislative moves came from the U.S. state of Wyoming, which enacted its Digital Asset Law (SF0125) effective July 1, 2019. This law explicitly recognizes digital assets as having economic, proprietary, or access rights and classifies them as property under the Uniform Commercial Code (UCC).
Under this framework:
- Digital assets are treated as intangible personal property.
- Trust laws allow for the control and protection of digital assets.
- Financial institutions can legally offer custody services for crypto holdings.
Wyoming’s model demonstrates a proactive regulatory stance—creating a clear legal foundation for ownership, transfer, and inheritance of digital assets. It signals a growing trend: treating virtual assets not as speculative tech novelties, but as legitimate forms of wealth deserving legal recognition.
This precedent supports the broader argument that virtual assets should be classified as property, specifically as a form of movable asset, to ensure legal certainty and protect user rights.
Virtual Assets as Property: A Legal Argument Based on Electromagnetic Records
At the heart of the classification debate lies a fundamental question: Can something intangible—like data stored on a blockchain—be considered "property" under civil law?
In jurisdictions like Taiwan, where civil law traditions emphasize tangible objects (things) as the basis for property rights, this presents a challenge. However, established jurisprudence offers a compelling solution: electromagnetic records.
Why Electromagnetic Records Matter
An electromagnetic record refers to digital data stored electronically—exactly what underpins cryptocurrencies and NFTs. Courts in Taiwan have increasingly recognized that:
- Virtual currencies lack physical form but exist as electromagnetic records.
- These records are human-controllable, economically valuable, and capable of identification through digital interfaces (e.g., wallets, blockchain explorers).
For example:
- The Taiwan High Court Taichung Branch (Case No. 112-Shang-Yi-372) ruled that Bitcoin constitutes a commodity-like electromagnetic record.
- Other rulings affirm that such records can be subject to seizure, theft, or unauthorized access—implying they carry property-like protections.
Moreover, mainstream legal scholars such as Wang Zejian acknowledge that modern interpretations of “property” should extend beyond physical objects. Electricity—an invisible yet controllable force—is widely accepted as a thing under civil law. By extension, electromagnetic records, being transformations of electrical signals, should also qualify.
Thus, we argue that virtual assets are special types of electromagnetic records with economic value, warranting classification as movable property under civil codes.
Proposed Legal Reforms: Integrating Virtual Assets into Civil Law
To close the gap between technological reality and legal structure, we propose amending civil codes to formally recognize virtual assets. Here are key legislative suggestions:
1. Define Virtual Assets in Civil Code
Introduce a new Article 67-2:
“Virtual assets are a type of movable property representing electromagnetic records that can be digitally controlled, including acquisition, storage, transfer, payment, trading, or other dispositions, and possess economic value.”
This establishes a clear legal category without requiring immediate overhaul of existing systems.
2. Extend Property Rights to Include Possession and Control
Add Article 67-3:
“Rights and possession related to virtual assets shall be governed by civil law unless otherwise specified by special statutes.”
This ensures that ownership disputes, inheritance claims, or theft cases involving crypto can be addressed using existing property and tort principles—until specialized laws emerge.
3. Recognize Exclusive Reproduction Rights
Drawing from copyright and computer crime laws, introduce Article 962-2:
“Holders of virtual assets have the exclusive right to reproduce their digital records.”
And Article 962-3:
“Unauthorized reproduction of another’s virtual asset or distribution of tools enabling public replication constitutes infringement if done for gain.”
This protects against duplication attacks while aligning with principles in intellectual property and cybersecurity law.
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Frequently Asked Questions
Q: Are cryptocurrencies considered legal tender?
A: No. Cryptocurrencies are not recognized as legal tender in any major jurisdiction. They are typically classified as assets or commodities.
Q: Can I inherit my crypto holdings?
A: Yes—but only if digital assets are legally recognized as property. Clear legislation and proper estate planning (e.g., wallet access instructions) are essential.
Q: Is stealing cryptocurrency a crime?
A: Increasingly yes. Courts treat unauthorized access or transfer of crypto as theft or computer fraud, especially when tied to identifiable electromagnetic records.
Q: Does treating crypto as property affect taxation?
A: Absolutely. Property classification usually triggers capital gains taxes upon sale or exchange, similar to stocks or real estate.
Q: Can governments seize cryptocurrency?
A: Yes. Judicial rulings allow seizure of crypto in criminal investigations, confirming its status as traceable and enforceable digital property.
Q: Why not treat crypto as currency instead of property?
A: Because it lacks central issuance and legal tender status. Property classification better reflects its use as an investment or store of value.
Toward a Coherent Legal Framework
The classification of virtual assets as movable property via electromagnetic records is both legally sound and practically necessary. It bridges traditional civil law with digital innovation, enabling:
- Clear ownership rights,
- Effective dispute resolution,
- Secure inheritance mechanisms,
- Regulatory clarity for exchanges and custodians.
While long-term solutions may include dedicated Virtual Asset Management Acts or VASP (Virtual Asset Service Provider) regulations, interim measures using statutory interpretation—supported by habitually recognized rights—can fill current gaps.
Ultimately, updating civil codes to reflect digital realities isn’t just about technology—it’s about upholding individual autonomy, dignity, and economic freedom in the 21st century.
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By embracing this evolution, legal systems can ensure fairness, security, and innovation coexist in the era of decentralized finance.