The legal status of cryptocurrency (specifically whether crypto is ‘property’) has been the subject of some debate amongst lawyers, judges and legal academics. 1
Recent amendments to the Proceeds of Crime Act 2002 (POCA) suggest that the Act is intended to apply to cryptocurrency.
There has not (as yet) been much debate about whether crypto currency can be restrained under the POCA or similar confiscations / criminal forfeiture legislation around the country. There have been a number of cases where crypto currency has been restrained (and even forfeited)2 without the Court being asked to carefully consider whether crypto currency is property.
What is property for the purposes of the Proceeds of Crime Act?
When the word “property” is used in a legal context, it is often (but not always) describing a right rather than a “thing” (sometimes a right in connection with a thing).3 Accordingly:
- The “property” a person has in their house is the right created under legislation to be recognised as registered proprietor of the land.
- If person X (debtor) owes person Y (creditor) $100, Y has “property” that he can sell or assign. For instance, Y might agree with Z that if Z pays Y the sum of $80 then Z can take over Y’s rights against X. This can be proifitable for Z who can make $20 – assuming that he can extract the full $100 from X.
There is no doubt that land (or the right to be recognised as registered proprietor of land) can be frozen, forfeited or confiscated under proceeds of crime or confiscation laws. Similarly there is no doubt that Y’s right to be paid $100 can be frozen, forfeited or confiscated.
It is important to observe that “property” and “interest” are both specifically defined in s338 of the POCA:
property means real or personal property of every description, whether situated in *Australia or elsewhere and whether tangible or intangible, and includes an *interest in any such real or personal property.
and
interest, in relation to property or a thing, means:
(a) a legal or equitable estate or interest in the property or thing;
or
(b) a right, power or privilege in connection with the property or thing;
whether present or future and whether vested or contingent.
State proceeds of crime laws have similarly broad definitions.
For that reason, it has been my view for some time that cryptocurrency is property (both in the ordinary legal meaning, and specifically having regard to the definition of property in the POCA).
In David Ian Ruscoe And Malcolm Russell Moore v Cryptopia Limited (in liquidation) [2020] NZHC 728 the New Zealand High Court held that cryptocurrency was property for the purpose of this definition in the Companies Act 1993 (NZ):
‘property means property of every kind whether tangible or intangible, real or personal, corporeal or incorporeal, and includes rights, interests, and claims of every kind in relation to property however they arise.’
Although the definition is expressed differently, I consider the reasoning would apply to the POCA definition of property.
Amendments confirm that cryptocurrency is property covered by the POCA
Parliament has now amended the POCA to specifically provide for its reach over cryptocurrency in one particular scenario. The amendments have been introduced to the POCA by the Crimes and Other Legislation Amendment (Omnibus No. 1) Act 2024 which came into effect on 24 October 2024.
The new amendments to the POCA to deal with cryptocurrency, do not go to the core provisions of the Act that deal with restraint (sections 17 – 20A) nor forfeiture (sections 47 – 49 and 92).
Rather, the new amendments expand the power of Magistrates to make interim (3 working day) freezing orders over cryptocurrency that is held in accounts with crypto exchanges. The amendments have been achieved by introducing a new definition for “account” in s 338. Part 2-1A of the POCA enables Magistrates to freeze an “account” for up to 3 business days (to enable the AFP to apply to the District / County or Supreme Court for a restraining order). The new definition of account includes:
account means any facility or arrangement through which a *financial institution accepts deposits, or allows withdrawals or transactions, and includes:
…
(ea) an account relating to *digital currency, including:
(i) an account representing an amount of digital currency; and
(ii) an account provided as part of a *digital currency exchange.
The words marked with asterisks are further defined in the POCA, often by reference to definitions in the AML/CTF Act 2006.
Exceptions
The new amendments do not permit Magistrates to issue interim freezing orders over cold wallets nor over crypto that is held outside Australia nor crypto that is otherwise not held in an account (as defined).
Arguably, by recognising that cryptocurrency can be held in an ‘account’, Parliament has recognised that cryptocurrency is ‘property’ (at least for the purposes of the POCA). It seems implicit to the scheme of the POCA that an account is an interest in property that is capable of restraint and forfeiture.
It seems reasonably clear that Parliament’s intention is that cryptocurrency can be restrained by the superior courts, whose powers (under ss 17 – 20A) are not limited to “accounts” but allow them to restrain any “property”.
- See for example ASIC v Web3 Ventures Pty Ltd [2024] FCA 64 https://jade.io/article/1062514 ↩︎
- Passing reference to a consent forfeiture of bitcoin was made by the Court of Appeal in Day v The Queen [2019] WASCA 60 at [25] https://jade.io/article/641138 ↩︎
- Yanner v Eaton (1999) 201 CLR 351 at 365–6 (Gleeson CJ, Gaudron, Kirby and Hayne JJ). ↩︎
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