In a landmark statement, a Singaporean court recognized crypto assets as property capable of being ‘held in trust.’ The decision comes as part of a case brought by Bybit against several defendants, including FTX and Consensys.
In a judgment reserved on Tuesday, Bybit’s case accused Ho Kai Xin of breaching her employment contract. It alleged that she secretly transferred Tether (USDT) to her own accounts.
Singapore Crypto Assets as Property
The court’s papers found that Tether, the largest USD-backed stablecoin, can be ‘held in trust’ or held by someone like a trustee, who is not the owner. The court noted that USDT could be transferred between holders without involving the legal system. This classifies it as a ‘chose in action.’ In intangible property law, this refers to the right to take legal action to enforce a debt or claim.
The court document stated,
“USDT grants a verified customer of Tether Limited the contractual right to redeem USDT for an equivalent value in fiat currency.”
Bybit argued in the case that USDT could be property. The platform asserted that it embodies the right to redeem for fiat currency. Bybit was also seeking summary judgment against Ho for breaching her employment contract.
Learn how real assets are backed by tokens here: Real World Asset (RWA) Backed Tokens Explained
“The relevant property is, therefore, also a chose in action, being the right to instruct the service provider in respect of the credit balance of USDT,” the court statement added.
The Judge cited a Rules of Court 2021 order. It stated,
“Cryptocurrency has thus been expressly recognized as a form of property capable of being the subject matter of an enforcement order.”
The court also clarified that in the past, it had acknowledged the possibility of holding crypto assets on trust when granting injunctions. But this case essentially boiled down to determining whether or not USDT qualifies as property.
Changing Rules for Singapore Crypto Assets
The statement also underlines that the value of crypto assets, like any other object, is not inherent but rather a perception based on human judgment. Based on the established property status of USDT, the court granted Bybit’s claim for summary judgment in the case.
Consequently, Bybit seeks the return of the assets traced to Ho. Bybit’s case for summary judgment was based on institutional constructive trust.
This court ruling could have significant implications for the treatment of crypto assets. Singapore recently mandated that crypto exchanges store customer assets in a Statutory Trust to protect against potential bankruptcy.
Moreover, Singapore’s Monetary Authority outlined new protocols for transferring digital programmable money. MAS described how it could facilitate transactions between businesses and vendors.
The classification of crypto assets may change their legal recognition across different jurisdictions. Despite the stricter regulations, Singapore remains open to businesses in the crypto space. It is evident in Ripple receiving regulatory approval to operate.
Additionally, DBS Bank introduced an e-CNY-based merchant settlement service as part of Singapore’s push into tokenization. The Monetary Authority of Singapore granted Crypto.com a Major Payment Institution (MPI) license. Circle, the issuer of the USDC stablecoin, also secured a license to operate in Singapore.
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