Cryptocurrency could spur significant developments in NZ property law
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Bitcoin or other cryptocurrencies may be the catalyst for significant developments in New Zealand law.
The treatment of 'intangible property' is an area ripe for clarification, and cryptocurrency may well give rise to the case to test the boundaries.
A Russell McVeagh publication explores the question of what legal remedies are available if bitcoins (or any valuable property rights stored on the blockchain) are stolen from the rightful owner and reviews the treatment of intangible property in various Commonwealth jurisdictions.
Banking and Finance Partner Tom Hunt says, "Cutting-edge innovations in cryptocurrencies, as well as blockchain technologies, smart contracts and robo-advice are shifting the landscape of financial services and the companies that make use of them.”
“While each promises a wealth of opportunities, these technologies also bring about new challenges in regulation and enforcement to be considered."
The more obvious claims available to target a third party recipient would not work if the third party received them innocently (the so-called 'bona fide purchaser' defence).
A claim in knowing receipt, a proprietary restitutionary claim or a claim for unjust enrichment, would probably be defeated by this defence.
One answer might be a claim in conversion.
Conversion is a tort of strict liability and may operate in circumstances where the bona fide purchaser defence does not apply.
It would, therefore, be a significant expansion of the rights of recourse if the New Zealand courts extended the tort to apply to intangible property such as cryptocurrency.
Litigation partner Chris Curran adds, "As the Blockchain is increasingly used to store things of value, this legal area seems likely to be tested at some point.”
“We will watch with interest to see where New Zealand lands regarding the protection of property rights in this emerging and disruptive FinTech field."