SINGAPORE Law and Practice Contributed by: Tju Liang Chua and Ulanda Oon, Drew & Napier LLC
1.1.5 Industry and Trade Bodies Singapore is home to several trade groups, such as the Association of Crypto Currency Enterprises and Start-ups Singapore (ACCESS), the Blockchain Association of Singapore (BAS) and the Digital Assets Association (DAA), which are designed to be platforms for members to engage with various stakeholders in the space to discover solutions and promote best practices. 1.2 Crypto-Assets 1.2.1 Property Considerations Digital Assets as Property The judge in ByBit Fintech Ltd v Ho Kai Xin [2023] 5 SLR 1748 (the “Bybit Fintech Case”) ruled that USDT is property capable of being held on trust. The case involved the theft of a number of USDT by the claim- ant’s ex-employee. The judge in the Bybit Fintech Case observed generally that, in principle, the holder of a crypto-asset has an intangible property right that is enforceable in court. The reason for this is twofold. Firstly, it clearly satisfies the traditional Ainsworth defi- nition of property rights: property rights must be defin- able, identifiable by third parties, capable of being assumed by third parties and have some degree of permanence or stability. Secondly, it is properly con- sidered a thing in action. In particular, by rejecting the argument that crypto-assets should not be classi- fied as things in action because there is no individual counterparty to the right of holders of these assets, the court recognised that the category of things in action has been expanded over time to ultimately include incorporeal rights such as copyrights. More recently, the Singapore High Court (SGHC) in Cheong Jun Yoong v Three Arrows Capital Ltd [2024] SGHC 21 (the “Three Arrows Case”) stated that it can- not be seriously disputed that crypto-assets consti- tute property. Determining Ownership of Digital Assets The manner of determining ownership of digital assets under Singapore law has not been conclusively deter- mined at the time of writing as the exact legal nature of digital assets remains unclear. The concept of “own- ership” vis-à-vis a digital asset under Singapore law
has not been directly challenged in any reported case to date. Nevertheless, following the approach of the Singapore Court of Appeal (SGCA) in Quoine Pte Ltd v B2C2 Ltd [2020] SGCA (I) 02 (the “Quoine case”) and the SGHC in the Three Arrows Case, it is anticipated that owner- ship of digital assets will be determined by analogy to other assets. A person who has acquired knowledge and control of a private key through lawful means will therefore generally be treated as the owner of that digital asset, in the same way that a person in lawful possession of a tangible asset is presumed to be the owner. Existing laws will then apply to each fact-specific sce- nario. For example: • a person may hold the key on behalf of another, as a custodian or intermediary. In this case, ownership may be determined by established laws on agency or trust; • a digital asset may have multiple keys – in this case, ownership may be shared or separated between the holders, perhaps by reference to dif- ferent functions of the asset; • a person who has obtained a private key unlaw- fully, such as through hacking, will not be treated as the lawful owner; or • in non-anonymous systems where the owners are identified in the transaction ledger, the status of the record (eg, whether treated as definitive or merely evidential) will depend on the rules of the block- chain system that the parties have agreed to. There is also no legal test for determining when trans- fers of digital assets can be considered final given that each blockchain may have different mechanisms for determining when a block containing the transaction can be reverted (eg, slashing a validator’s stake) and may differ in confirmation times and numbers before another block can be added. However, for commercial certainty, parties can contractually agree that a trans- fer has occurred on the basis that a certain number of confirmations on the blockchain network have been provided.
557 CHAMBERS.COM
Powered by FlippingBook