Digital Financial Assets: Concept and Legal Nature

Abstract

Tokens and other digital technologies, in essence, can be considered neither property nor objects of civil law, nor are they inherently a part of civil rights per se. These technical solutions acquire a corresponding legal status only when they become an object of such legal relations. When this occurs, they are considered digital assets and are consequently subject to legal regulations. The legal nature of tokens is amatter of much dispute: some define them as objects of civil law, while others view them as a means to confirm the rights to a legal object. This article aims to prove that tokens can serve both functions. In most cases, tokens serve as a means of confirming rights to certain tangible objects (for instance, tokens as a means to secure civil rights). In this function, tokens for cryptocurrencies and digital securities, however, become legal objects in and of themselves because they play a part in legal relations (that is, tokens serve as a legal object). Tokens can be objects of absolute and relative rights. The common law doctrine treats an absolute right to cryptocurrencies and digital securities as a property right. Continental law, on the contrary, cannot include them in the property rights category since property within this legal framework is always tangible. Digital assets, however, are intangible. Therefore, they are not property. This article suggests that digital assets are objects of a new absolute right that is similar to property rights, except for one distinction: an object is not necessarily a thing. Based on the authors’ concept, this new right can be referred to as an absolute digital right.