Knaken Bankruptcy Highlights Ownership Uncertainty for Crypto Assets

When crypto exchange 'Knaken' declared bankruptcy this summer, its clients were left wondering if they ever truly owned their crypto-assets. This question is crucial in determining their position in insolvency proceedings.

In other countries, courts have already ruled that customers own the assets they invested in, citing cases like Celcius and BitGrail in the US and Italy respectively. However, Japan's parliament intervened after its courts initially rejected ownership, amending the law to include crypto-assets.

Under Dutch property law, crypto-assets are not considered 'things', which can be owned, because they do not meet all the necessary requirements. They must be corporeal, an object, and subject to human control. Crypto-assets are digitally coded and lack a tangible presence, failing the corporeality test.

The EU's Markets in Crypto-Assets Regulation (MiCAR) may seem to recognize ownership rights over crypto-assets, but its language is borrowed from existing regulations like MiFID II. This means that national property law still applies, and customers are merely creditors in insolvency cases rather than owners with specific claims.

The Dutch parliament might consider introducing legislation similar to Japan's, which would allow crypto-asset ownership and potentially impact other intangible assets as well.