The UK High Court’s Landmark Decision on Tether USDT
The ever-evolving landscape of cryptocurrency adoption witnesses a continual transformation, as highlighted by Chainalysis’s Global Crypto Adoption Index. In this context, the latest report underscores the leading positions of India and Nigeria, with the United Kingdom occupying the 12th spot among the top 20 nations.
Despite its previous standing, recent developments within the UK’s regulatory framework suggest a positive shift on the horizon.
A Historic Legal Precedent
In a significant legal milestone, the British High Court has officially recognized Tether (USDT) as ‘property,’ marking a groundbreaking step in cryptocurrency classification under English law post a meticulous trial.
On September 12, Deputy Judge Richard Farnhill of the High Court of Justice articulated:
“USDT holds property rights within the scope of English law.”
Further emphasizing, he noted:
“It [USDT] represents a unique form of property, distinct from choses in action or in possession, capable of being traced and qualifying as trust property akin to other assets.”
Judge Farnhill’s directive upholds a well-established legal principle affirming cryptocurrencies as legitimate property, citing an uncontested 2019 court ruling that set the precedent.
Implications and Beyond
This judicial perspective echoes the stance of the Law Commission of England and Wales, as outlined in its 2023 report which categorizes digital assets as property.
It’s worth noting that this pivotal ruling coincided with the introduction of a government bill in the UK, aimed at redefining NFTs, cryptocurrencies, and carbon credits as tangible ‘things’ under existing property laws.
This legislative proposal expands the conventional definition of ‘property’ to encompass digital assets that confer personal rights, emphasizing the imperative need to acknowledge and assimilate such assets into the property regulatory framework as a reflection of their growing importance.
Challenges and Clarifications
In a recent legal dispute, the status of USDT was central, particularly in a case concerning the laundering of fraud victim Fabrizio D’Aloia’s stolen cryptocurrencies, including USDT, through crypto mixers and exchanges.
Although acknowledging the fraudulent activity, Judge Farnhill ruled against D’Aloia’s breach of trust claims due to the inability to trace the misappropriated USDT to BitKub’s wallet, attributable to the use of crypto mixers.
Tether’s Ascendancy in the Stablecoin Market
Amidst these legal deliberations, Tether has solidified its dominance within the stablecoin sector.
Visa’s on-chain analytics reveal USDT’s notable lead over Circle’s USDC in transaction volume, underscoring its prominent market position.
As anticipated, Tether’s substantial market capitalization of $91.69 billion at the outset of 2024 has steadily grown, surpassing $117.84 billion by August, further bolstering its pivotal role in the stablecoin market.