CNPupdates

By Bill Jamieson, Beatrice Lau and Tian Xinhe.

Introduction

When someone owes an obligation to pay a debt in fiat currency, the holder of that debt has a chose in action that is enforceable in court. But what about a payment obligation in cryptocurrency? Can it be regarded as the same type of obligation as a money debt? What is the legal nature of an obligation to pay in cryptocurrency? This article aims to summarise the current position at law on this issue, and posit possible developments and interpretations that may arise in the future.

Does the holder of a crypto asset have a right in the form of a chose in action or simply a right in possession?

It is apt to first determine whether the holder of a crypto asset has a right in the form of a chose in action or simply a right in possession. The Singapore High Court in ByBit Fintech Ltd v Ho Kai Xin and others [2023] SGHC 199 (“ByBit”) held that the holder of a crypto asset has a right in the form of a chose in action, which is enforceable in court. One common argument is that crypto assets should not be classified as choses in action, because there is no individual counterparty to the crypto holder’s right, and that right is thus not enforceable against any particular person in court. However, the court in ByBit opined that the category of choses in action has expanded to include documents of title to incorporeal rights of property, and ultimately incorporeal rights themselves such as copyrights. Thus, the court held that the holder of a crypto asset has in principle an incorporeal right of property recognisable by the common law as a chose in action and enforceable in court as such. The crypto asset in ByBit was USDT (Tether), and the reasoning drew on the contractual right of a verified customer of Tether Limited to redeem USDT for US dollars; the analysis therefore travels less comfortably to an unbacked exchange token such as Bitcoin, which confers no claim against any issuer. ByBit is a first-instance decision on a summary judgment application, and it sits in contrast with the position now taken in England and Wales, where the Property (Digital Assets etc) Act 2025 (c 29), in force from 2 December 2025, provides that a thing is not prevented from being the object of personal property rights merely because it is neither a thing in possession nor a thing in action.

Can a payment obligation in cryptocurrency be regarded in the same way as a debt payable in money?

Thus, as the law stands, the holder of a crypto asset has a right in the form of a chose in action. However, whether a payment obligation in cryptocurrency can be regarded as being the same type of obligation as a debt payable in money is a different issue. While there has been no authoritative pronouncement on this issue, two cases involving the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) provide some guidance.

In Algorand Foundation Ltd v Three Arrows Capital Pte Ltd (HC/CWU 246/2022) (“Three Arrows”), the Singapore High Court held that a payment obligation denominated in cryptocurrency is not a money debt capable of forming the subject matter of a statutory demand under section 125(2)(a) of the IRDA. It is worth stating expressly that the claim in that case was for 53.5 million USDC (Circle), itself a single-currency pegged stablecoin, and that Algorand argued in terms, by analogy with the recognition of foreign currency, that cryptocurrency is money. Coomaraswamy J rejected the argument. The decision is unreported and was delivered ex tempore on 30 March 2023, which limits its weight as precedent. The Court reasoned on the basis that the word “indebted” in Section 125(2)(a) was limited to a debt denominated in fiat currency. While a party owed a sum denominated in cryptocurrency is a “creditor” under section 124(1)(c) of the IRDA for the purposes of establishing the party’s standing to bring a winding-up application, such a party does not possess a claim for a money debt; accordingly, a statutory demand for a payment obligation denominated in cryptocurrency would be invalid for the purposes of deeming that a company is unable to pay its debts in section 125(2)(a) of the IRDA.

On this view, cryptocurrency and fiat currency are not functionally equivalent. There are thus more limited remedies available in law to a creditor for the breach of a payment obligation expressed in cryptocurrency compared to one expressed in fiat currency. Importantly, a common law action for a debt would not be available.

In contrast, in Loh Cheng Lee Aaron and another v Hodlnaut Pte Ltd (Zhu Juntao and others, non-parties) [2023] SGHC 323 , the Singapore High Court (Aedit Abdullah J) held that a company’s obligation to deliver cryptocurrency to its creditors counts as a “debt” for the purposes of the cash-flow insolvency assessment under section 125(1)(e) read with section 125(2)(c) of the IRDA, and wound up Hodlnaut Pte Ltd on that basis.

There, it was argued that the cryptocurrency obligations of the Company were not debts within the meaning of the applicable law, and thus should not be considered in determining whether the company was indeed insolvent. However, the Court held that the Company’s obligation to pay cryptocurrency to its creditors counted as debts owed by the Company.

Importantly, the court distinguished the case from Three Arrows: There, winding up was sought on the basis of indebtedness under s 125(2)(a) of the IRDA. The precise demand in question was in cryptocurrency, which failed the requirement under s 125(2)(a) as it was not a demand for a money sum. The court opined that Three Arrows did not stand for the proposition that pursuing and obtaining a judgment to obtain liquidated damages is necessary before an assessment is made of cash flow insolvency.

However, the court left it open as to whether cryptocurrency should be treated as money in the general sense, as it was not a question which had to be decided in the present case.

What remedies are available upon a failure to return a crypto asset?

In the English case of Southgate v Graham [2024] EWHC 1692 (Ch) (“Southgate”), the dispute involved a loan of 144 Ethereum tokens which the “debtor” failed to return, leading the “creditor” to seek either specific performance (the actual return of the tokens) or damages in the alternative.

The court accepted that a contract for the return of cryptocurrency tokens may, in an appropriate case, be specifically performable. However, in this instance, the court upheld the lower court’s refusal to grant it, noting that (1) specific performance would cause hardship to the debtor and (2) monetary damages were adequate compensation for loss resulting from a failure to return cryptocurrency, since it is not “special property” like land or a specific chattel. The appeal in fact succeeded on a second ground: Trower J set aside the trial judge’s choice of the date of breach as the valuation date for damages, holding that the valuation date is a question of mitigation, turning on whether there was an available market in which the claimant could have replaced the tokens. Given the volatility of the assets, that limb has proved the more consequential in practice, and it has been picked up in Singapore in Fantom Foundation Ltd v Multichain Foundation Ltd [2024] SGHC 173 and in later decisions on the assessment of crypto losses.

Summary of the current position

Broadly speaking, the position seems to be as follows: an obligation to pay a sum of money sounds in debt, whereas an obligation to deliver a quantity of crypto assets sounds in damages, because the crypto asset is treated as the subject matter of the obligation rather than as the money in which the obligation is denominated.

As the law stands, a debt denominated in cryptocurrency is not a money debt under statute, at least in the context of insolvency (i.e. the IRDA) (Three Arrows). There are more limited remedies available in law to a creditor for the breach of a payment obligation expressed in cryptocurrency compared to one expressed in fiat currency.

However, in the event of a failure to repay an amount in cryptocurrency, specific performance is in principle available to the lender, but the starting point after Southgate is that damages are an adequate remedy; the lender must show both that damages would be inadequate and that an order would not cause hardship to the defendant-borrower. This would thus presumably require the borrower to return the crypto asset itself, in these circumstances (Southgate).

The characterisation of stablecoins as money: a substance over form approach

The cases discussed above leave open a wider question: in what circumstances, if any, might an obligation denominated in cryptocurrency give rise to a money debt? This question is addressed by Lance Ang in his article “Digital Currency as Money: The Case of Stablecoins” (Asian Journal of Comparative Law, published online by Cambridge University Press on 10 July 2026), which proposes a framework for how the common law should approach the characterisation of single-currency pegged stablecoins (“SCS”) as money.

Why does the characterisation matter?

If SCS are characterised as commodities rather than money, agreements providing for their use as a means of payment would be treated as effectively barter arrangements, leaving a “creditor” with only an unliquidated claim for damages, for which it must prove, mitigate its loss, and establish that its loss is not too remote. If, instead, SCS are characterised as money, non-payment would give rise to a claim in debt enforceable by summary judgment. It would also permit a monetary remedy denominated in SCS in the same way a payee may be awarded a remedy in foreign currency, allow creditors with mutual SCS-denominated debts to rely on legal set-off, facilitate the assignment of such debts, and allow creditors to petition for bankruptcy or winding-up on the basis of the debt owed.

Payment-like versus investment-like digital currencies

A distinction must be drawn between digital currencies that serve as a means of payment and those that serve primarily as investment or speculative instruments. Exchange tokens such as Bitcoin have no nominal value, are not backed by reserve assets, and are not pegged to any fiat currency. Their resulting volatility makes them poorly suited as a means of payment. SCS, by contrast, are backed by reserves and pegged to a single fiat currency on a 1:1 basis, and their relative stability makes them stronger candidates for characterisation as money.

The substance over form approach

Ang proposes a substance over form approach, under which the status of an instrument is determined not by its legal form or origin, but by whether it serves as an effective means of the transfer of monetary value between parties, regardless of its underlying technology. On this approach, money is the physical or digital representation of value that serves as a means of payment with reference to the nominal value of the instrument, the use of which is facilitated or supported by the State’s legal and regulatory framework even if it is not issued by the State.

The nominalism principle is particularly central to this framework: money is issued and exchanged on the basis of its nominal value, such that the payee is entitled to be paid at par regardless of fluctuations in the strength of the currency, subject to the parties’ agreement. This distinguishes money from securities traded at a fluctuating market value. Notably, neither the Singapore nor the United Kingdom regulatory approach purports to confer legal tender status on SCS, which remains reserved for central bank money, but both are intended to facilitate their use as a means of payment.

Under the proposed frameworks, holders of regulated SCS have a standardised redemption claim against the issuer for the underlying monetary value. Because the issuer is required to hold reserve assets on trust for holders, the SCS holder (unlike an ordinary bank depositor) would have a proprietary claim against those reserve assets in insolvency rather than an unsecured one. That conclusion depends on the trust being validly constituted under the issuer’s governing law and on the reserve assets remaining identifiable; it does not follow automatically from a regulatory requirement to segregate.

Gaps in the law

The above trust-based structure is a feature of some, but not all, regulated stablecoin regimes. MAS’s finalised framework requires reserve assets to be held in segregated accounts on trust, and in the UK the FCA’s rules adopt a statutory trust; in the USA the GENIUS Act, by contrast, relies on excluding reserves from the issuer’s bankruptcy estate and on statutory priority rather than on any proprietary interest, which is why the authors below propose replacing those provisions with a perfected security interest under Article 9 of the Uniform Commercial Code. It is not a feature of commonly used stablecoins such as USDT or USDC. This was highlighted separately by Christopher K. Odinet, Andrea Tosato and Yesha Yadav (“OTY”) in “What Makes Something Money? Stablecoins and the Architecture of ‘Moneyness’” (Oxford Business Law Blog, 17 June 2026), summarising their article The Moneyness of Stablecoins, in the Yale Law Journal. Tether and Circle’s promise of 1:1 redemption is only binding between the issuer and a small number of users who have direct contractual relationships with the issuer. Those who acquire tokens on secondary markets have no privity of contract with the issuer and thus, on the authors’ analysis, no direct redemption right; OTY put the number of verified counterparties at 882 for Tether and approximately 1,834 for Circle. The position is not identical across the two issuers. Circle’s USDC terms provide that a transfer of USDC automatically transfers and assigns to the transferee, and to each subsequent holder, the right to redeem USDC for US dollars, conditional on that holder being eligible for and registering a Circle Mint account. The obstacle there is the eligibility gateway rather than the absence of any right; for USDT the privity point holds more straightforwardly, the primary market consisting only of Tether and its verified customers, subject to a US$100,000 minimum. Otherwise, holders have no proprietary claim against those reserve assets and would stand only as unsecured creditors. Two qualifications should be added. First, the insolvency forum matters: USDT is issued by a British Virgin Islands company operating principally out of El Salvador, so the ranking of holders would not be determined by United States bankruptcy law. Secondly, the proposition is jurisdictionally bounded. Under Article 49 of the EU Markets in Crypto-Assets Regulation, holders of e-money tokens have a claim against the issuer for redemption at par at any time, and that claim arises by operation of law irrespective of whether the holder has ever contracted with the issuer. Circle’s EEA-issued USDC and EURC fall within that regime; USDT does not.

The current legal frameworks are still incomplete and unable to address the gap. For instance, MAS announced its finalised framework for single-currency stablecoins on 15 August 2023, in its response to the October 2022 consultation. Under that framework, holders may redeem MAS-regulated SCS at par value within five business days of a request, and issuers must hold reserve assets in segregated accounts on trust with licensed custodians. However, it is uncertain whether “holders” extends to secondary market token holders; the framework applies only to SCS pegged to the Singapore dollar or a G10 currency and issued out of Singapore, so USDT and USDC would fall outside it in any event; and, as at August 2026, the necessary amendments to the Payment Services Act 2019 had not been enacted.

In July 2025, the United States Congress enacted the GENIUS Act, a comprehensive federal framework for stablecoin issuance. The Act is not yet in operation: it takes effect on the earlier of 18 January 2027 and 120 days after the primary federal payment stablecoin regulators issue final implementing rules, and the statutory rulemaking deadline of 18 July 2026 passed without those rules being finalised. Until then, the contractual position described above continues to govern. While OTY expressed that the Act brought real improvements to the regulations of stablecoins through the introduction of 1:1 reserve high-quality asset backing mandate, rehypothecation prohibition, redemption as a legal obligation, and exclusion of reserves from debtor’s bankruptcy estate, they highlighted that other gaps still exist. For instance, uncertainty whether obligation is statutory or contractual, to whom it runs, or whether it is embedded in the token, as well as other problems particular to the GENIUS Act . One of the reforms the authors proposed involves the tokenizing of the redemption right so that the control of digital asset carries with it the entitlement to demand redemption, giving users who acquire tokens on secondary markets a proprietary claim against the reserve assets.

Conclusion

As the law stands, the regulatory framework governing stablecoins is still in its infancy stage and remains inadequate to supplement the substance over form approach proposed by Ang.   The holder of a crypto asset has a right in the form of a chose in action under Singapore law. However, the nature of a payment obligation in cryptocurrency is less straightforward The immediate obstacle is judicial rather than regulatory: Three Arrows was itself a case about USDC, and the court there declined to treat a single-currency pegged stablecoin as money for the purposes of section 125(2)(a) of the IRDA. A Singapore court adopting Ang’s approach would have to distinguish or decline to follow that decision. Being unreported and delivered ex tempore, it is open to a later court to do so.