A month on from the implementation of the European Union’s Fifth Money Laundering Directive (EU) 2018/843 (the “5MLD”) which placed cryptoassets under the supervision of the Financial Conduct Authority (the “FCA”), an unprecedented ruling from the High Court in AA v Persons Unknown  EWHC 3556 (Comm) confirmed that cryptoassets can be treated as property in the United Kingdom.
In Persons Unknown, an English insurance company (the “Claimant”) claimed against persons unknown and entities trading as Bifinex (the “Defendants”) following a cyber ransomware attack (the “attack”) of a Canadian insurance company (the “insured customer”). The attack consisted of the encryption of the insured customer’s computer system. The insured customer paid a ransom of USD 950,000 by way of 109.5 Bitcoin in exchange for a decryption tool. The application to the Court included: (i) an information disclosure order (the “Order”) in relation to Bitcoin accounts in order to identify the account holders to where the payment in Bitcoin was set; and (ii) a proprietary injunction to prevent any payment to be made with Bitcoin from the account that received the ransom.
With this decision, the High Court endorsed the position set by the UK Jurisdiction Taskforce (the “UKJT”) which, as part of the Law Tech Delivery Panel (the “LTDP”), published a Legal Statement on the Status of Cryptoassets and Smart Contracts (the “Legal Statement”) in November 2019, which concluded the following:
- cryptoassets have all the indicia of property;
- the distinctive features possessed by some cryptoassets – intangibility, cryptographic authentication, use of distributed transaction ledger, decentralisation, rule by consensus – do not disqualify them from being property;
- nor are cryptoassets disqualified from being property as pure information, or because they might not be classified either as things in possession or as things in action; and
- cryptoassets are therefore to be treated in principle as property.
The Ruling: Are cryptoassets property?
In Persons Unknown Mr. Justice Bryan confirmed the Legal Statement to be accurate as to the position under English law, and held that cryptoassets such as Bitcoin are property. This was on the basis that Bitcoin met the four criteria for the classic definition of property in National Provincial Bank v Ainsworth  1 AC 1175, namely to be definable, identifiable by third parties, capable on their nature of assumption and having some degree of permanence.
In line with the Legal Statement, Mr. Justice Bryan accepted that the law may recognise forms of property other than those traditionally required by the authorities (i.e. choses in action and choses in possession) given that the characteristic features of Bitcoin and, particularly their intangibility, do not disqualify them from being property.
Although this was not the first time that the High Court considered this matter in granting injunctions over cryptoassets, Persons Unknown was key in reaffirming their status as property. Previous decisions included the grant of an asset preservation order over Bitcoin and a worldwide freezing order in respect of Bitcoin and Ethereum.
What are the main consequences of considering cryptoassets property?
Cryptoassets are a crescent reality in the investment market that remains exposed to fraud, money laundering and cyberattacks, particularly as virtual currency allows greater anonymity than traditional non-cash payment methods. Further, virtual currencies commonly rely on complex infrastructures across different countries, therefore customer and transaction records may be held by different entities, in different jurisdictions.
It is in this context that considering cryptocurrencies as property has a key legal implication, as this brings them into the remit of proprietary injunctions, thus prohibiting a party from disposing or dealing with its assets or ordering the disclosure or identification of a third party. In light of their intrinsic features such as their anonymity and the speed of the cryptoasset market, it is crucial to allocate and identify the complex infrastructures of cryptoasset holders in a timely manner. The adoption of this approach in Persons Unknown provided the claimants with a powerful tool to trace and recover cryptoassets, even when allocated outside the jurisdiction.
Whilst 5MLD put in place a decisive framework for anti-money laundering regulations, placing the cryptocurrency market under the protection of the FCA, the fast development and nature of the cryptoassets market requires adaptability from businesses and regulators.
The increasing popularity of cryptoassets presents new challenges in a fast changing market. This should be observed in parallel with the practicalities following the implementation of the 5MLD and, in particular, the extended power of enforcement in relation to crypto-assets conferred to the FCA to detect money laundering and terrorist financing. 
The decision in Persons Unknown demonstrates the intention of the Court to accommodate the exigencies of technological and business innovations, however, the practicalities of enforcement action against cryptoassets remains to be seen.