The Need for a New Absolute Civil Right
Absolute civil rights are rights that can be enforced against anyone who infringes them, unlike contractual rights, which can only be exercised against the other party in the contract. Classic examples of absolute civil rights include property rights, such as ownership and copyrights. These rights provide broad protection and are fundamental to legal systems in the EU and worldwide.
The right to bitcoin does not fit into any existing category of absolute civil rights. This is understandable, as bitcoin is a novel asset that has only existed since 2009. However, there is a growing need to establish a new absolute right: the right to bitcoin or, more broadly, the right to scarce information.
Legal Gap
Bitcoin isn’t a tangible object and can’t be owned or controlled under classic property rights. It also doesn’t fit into the category of intangible goods like those protected by copyright or industrial property rights.
Legally speaking, bitcoin isn’t considered money, nor is it classified as a security, a participation title in joint investment institutions, or a derivative instrument. The need to protect the private key doesn’t qualify bitcoin as a trade secret, especially since it’s also used by non-entrepreneurs.
While regulations on income tax, anti-money laundering, and counter-terrorism financing recognise bitcoin as a “virtual currency,” they don’t define its civil-law nature. Similarly, the upcoming EU regulations on crypto assets (MiCA) and information on transfers of funds also fail to address bitcoin’s civil-law character.
This gap exists because bitcoin is a unique type of proprietary asset that was unimaginable before 2009.
Scarce Information: A New Asset Type
Bitcoin, like other intangible assets, is essentially information—a collection of bits. Typically, information is easily duplicated, which makes it non-scarce and therefore lacking economic value. Scarcity and value in information are usually ensured through state intervention, like copyrights for works of authorship or patents for inventions.
However, Bitcoin network introduced a new kind of information: inherently scarce information. Thanks to its decentralised network and immutable rules, there will only ever be 21 million bitcoins. This scarcity is not controlled by any central authority but is built into the system.
Lack of Protection and Uncertainty
Despite the freedom to transact bitcoin, the existing laws do not provide absolute protection for bitcoin holders. Attempts to apply existing property, tort, or criminal laws to Bitcoin fail to address its unique nature.
For instance, property laws protect physical mediums (like the device storing the private key) but not bitcoin itself, which is an intangible asset. Tort laws might allow for damages against those who unlawfully acquire a private key but not against those who come by it without breaking the law.
Possession protection and unjust enrichment claims also fall short. They are not adapted to bitcoin’s specific characteristics, like the potential for co-ownership, inheritance issues, and marital rights to bitcoin.
Towards Legal Clarity for Bitcoin
It is time to clarify bitcoin’s legal status and create a protection system for bitcoin holders. Public regulations are not sufficient; we need private law provisions defining bitcoin’s status in civil-law relations.
Several solutions are possible:
1. Granting Bitcoin Legal Status of Money: This would protect bitcoin owners similarly to monetary fund owners. Paying debts with bitcoin would be akin to using money, and it wouldn’t generate taxable income.
2. Applying Ownership Provisions to Bitcoin: Modifying existing ownership laws to include bitcoin could work. Despite being intangible, bitcoin shares property-like characteristics—durability, countability, divisibility, and creation through energy use.
3. Creating a New Absolute Right: Establish a right to scarce information. Bitcoin, unique among crypto assets, fits this category as its issuance is fixed and practically unchangeable. This right would provide protections similar to ownership, with specific considerations for bitcoin’s characteristics like private keys and transaction confirmations.
The delay in civil-law regulation of bitcoin reflects the natural lag of law behind innovation. As bitcoin adoption grows, its revolutionary nature will become harder to ignore. Legislators should provide adequate protection and freedom for bitcoin users rather than restrict or delay the technology. Recognising bitcoin’s significance could offer advantages to individuals, businesses, and states that embrace it early.
