Virtual assets—commonly known as cryptocurrencies or digital assets—are reshaping the global financial landscape. While most users focus on trading, investing, or technological innovation, the legal community remains deeply engaged in a foundational question: How should virtual assets be classified under the law? This classification is not merely academic; it directly impacts ownership rights, inheritance, regulatory oversight, and dispute resolution.
This article explores the evolving legal nature of virtual assets, drawing on international standards, domestic jurisprudence, and legislative developments. We examine whether virtual assets qualify as property, how they relate to existing civil law frameworks, and what legal reforms are needed to ensure clarity and protection in the digital age.
Defining Virtual Assets: An International Perspective
The Financial Action Task Force (FATF), an intergovernmental body established by the G7, provides one of the most widely accepted definitions of virtual assets. According to FATF’s 2018 guidance, a virtual asset is:
“A digital representation of value that can be digitally traded or transferred and used for payment or investment purposes, but does not include fiat currency, securities, or other financial assets already covered under existing regulations.”
This definition intentionally excludes traditional financial instruments, focusing instead on decentralized digital value systems like Bitcoin and Ethereum.
FATF also defined virtual currency in its 2014 report as a digital representation of value that functions as:
- A medium of exchange
- A unit of account
- A store of value
However, it lacks legal tender status—meaning creditors are not obligated to accept it as payment.
These definitions have influenced regulatory approaches worldwide. Notably, the shift from "virtual currency" to "virtual asset" reflects a broader recognition that digital value extends beyond currency-like tokens to include NFTs, utility tokens, and data-based digital rights.
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U.S. Precedent: Wyoming’s Digital Asset Law
One of the most progressive legal frameworks comes from Wyoming, a U.S. state that enacted the Digital Asset Act (SF0125) in 2019. This legislation grants digital assets full property status under the Uniform Commercial Code (UCC).
Under Wyoming law:
- Digital assets are defined as electronic records with economic, proprietary, or access rights.
- They are legally recognized as property, enabling secured transactions, collateralization, and inheritance.
- Trust laws have been updated to allow for the control and protection of digital assets.
This pioneering move demonstrates how jurisdictions can proactively shape a regulatory environment conducive to blockchain innovation while providing legal certainty for users and institutions.
Such models serve as blueprints for other regions seeking to balance innovation with consumer protection and financial integrity.
Are Virtual Assets “Property” Under Civil Law?
In civil law systems like Taiwan’s, the classification of virtual assets hinges on whether they meet the criteria for being considered "things" (物) under property law.
Traditionally, property law distinguishes between tangible and intangible assets. However, modern interpretations increasingly recognize that control, value, and exclusivity matter more than physical form.
Legal scholars such as Wang Ze-Jian argue that items like electricity—though intangible—are considered property because they are:
- Capable of human control
- Useful in daily life
- Transferable and measurable
Following this logic, electromagnetic records (電磁紀錄)—the technical basis of virtual assets—are merely a form of digitized energy. Since they can be stored, transferred, and assigned economic value, they should be treated as movable property.
Multiple court rulings support this view:
- The Taiwan High Court (Kaohsiung Branch), Case No. 112-Shang-Yi-372, ruled that cryptocurrency constitutes a commodity-like electromagnetic record.
- The Tainan District Court, Case No. 106-Su-1907, affirmed that digital assets have economic value and can be subject to seizure.
These decisions signal a judicial trend toward recognizing virtual assets as legitimate forms of property.
Proposed Legal Framework: Recognizing Virtual Assets as Movable Property
To align civil law with technological reality, we propose amending Taiwan’s Civil Code to formally recognize virtual assets. Specifically:
Article 67-2 (Proposed): Definition of Virtual Assets
“Virtual assets are a form of movable property representing electromagnetic records that can be digitally controlled, including acquisition, storage, transfer, payment, trading, or other dispositions, and possess economic value.”
This definition captures the essence of blockchain-based assets while remaining flexible enough to include future innovations.
Article 67-3 (Proposed): Applicability of Civil Law
“Rights and possession related to virtual assets shall be governed by the provisions of this Code unless otherwise provided by special laws.”
This ensures legal continuity during the transition period before comprehensive virtual asset legislation is enacted.
Moreover, given the replicable nature of digital data, we recommend introducing a replication right—similar to copyright protections—to prevent unauthorized duplication.
Article 962-2 (Proposed): Exclusive Replication Right
“The holder of a virtual asset has the exclusive right to reproduce it, unless otherwise stipulated by law.”
Article 962-3 (Proposed): Prohibition of Unauthorized Replication
“No person shall reproduce another’s virtual asset without authorization. Any person who reproduces or publicly distributes tools enabling unauthorized reproduction for profit shall be deemed to have infringed upon such asset.”
These provisions draw inspiration from existing computer crime statutes and intellectual property law, adapting them to the unique characteristics of digital ownership.
Frequently Asked Questions (FAQ)
Q: Can virtual assets be inherited?
Yes. If legally recognized as movable property, virtual assets can be included in wills and transferred upon death—just like bank accounts or physical valuables.
Q: What happens if my crypto wallet is hacked?
Under current laws, recovery depends on proving ownership and loss. Formal recognition as property would strengthen legal remedies, allowing claims for conversion or unjust enrichment.
Q: Are all digital data considered virtual assets?
Not necessarily. Only data with economic value and exclusive control—such as cryptocurrency keys or NFTs—qualify. General user data or public content do not meet the threshold.
Q: How does this affect exchanges and custodians?
Clear classification enables better regulation of Virtual Asset Service Providers (VASPs), defining their duties regarding custody, disclosure, and liability.
Q: Could this lead to double taxation?
Not inherently. Proper classification helps avoid ambiguity in tax treatment—ensuring digital assets are taxed consistently with other forms of property.
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Toward a Comprehensive Virtual Asset Legal Regime
While incremental reforms through judicial interpretation are possible, long-term clarity requires dedicated legislation—such as a Virtual Asset Management Act—to govern issuance, custody, transfer, and dispute resolution.
Until then, treating virtual assets as electromagnetic records with property status offers a practical bridge between existing civil law and emerging technologies.
Core keywords integrated throughout:
virtual assets, legal classification, electromagnetic records, movable property, digital asset law, property rights, FATF, civil code reform
By embracing these changes, legal systems can uphold principles of private autonomy, protect individual rights, and foster innovation in the digital economy.
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