For the crypto industry, 2022 was a nadir of sorts. Significant events included the collapse of the Terra stablecoin and the bankruptcy of FTX, Hodlnaut, and Three Arrows Capital. These developments arguably served to accelerate the introduction of Singapore governmental measures, led primarily by the country’s financial regulator, the Monetary Authority of Singapore (MAS), to enhance investor protection and market integrity in relation to crypto assets.
This article examines recent significant developments in Singapore arising from court jurisprudence and government-led measures in the crypto and digital assets sphere. There appears to be a clear trend towards the enhancement of investor protection and market integrity.
Crypto Assets Are Property That Can Be Held On Trust
In the landmark case of Quoine Pte Ltd v B2C2 Ltd  SGCA(I) 02 (Quoine v B2C2), a five-member bench of Singapore’s apex court, considered the question of “whether cryptocurrency, specifically [Bitcoin], is a species of property that is capable of being held on trust”. While observing that “there may be much to commend the view that cryptocurrencies should be capable of assimilation into the general concepts of property”, the Singapore Court of Appeal ultimately declined to rule conclusively on this issue, leaving open the question of whether cryptocurrencies could be subject to a trust.
In two subsequent decisions, CLM v CLN  SGHC 46 (CLM) and Janesh s/o Rajkumar v Unknown Person (CHEFPIERRE)  SGHC 264 (Janesh), the Singapore High Court agreed with the oft-expressed view in commonwealth jurisdictions that there was at least a good arguable case that crypto assets (eg Bitcoin and Ethereum in CLM; non-fungible tokens in Janesh) are capable of attracting proprietary relief such as injunctions.
Given these earlier decisions in Quoine, CLM and Janesh, the Singapore courts’ latest decision in ByBit Fintech Limited v Ho Kai Xin  SGHC 199 (ByBit) felt almost inevitable. In Bybit, the Singapore High Court held that it should be “legally possible to hold [crypto assets] on trust”.
The claimant in ByBit alleged that the defendant breached her employment contract and abused her position to transfer quantities of the claimant’s USDT (a cryptocurrency) to addresses that the defendant owned and controlled. Bybit therefore sought, among other things, a declaration that the transferred USDT was held on trust for Bybit. The High Court decided that crypto assets satisfied the Ainsworth’ definition of property, that “the holder of a crypto asset has in principle an incorporeal right of property recognisable by the common law as a thing in action and so enforceable in court”, and in so doing granted a declaration of constructive trust over the stolen USDT.
The Singapore High Court’s holding in ByBit, that crypto assets can represent a chose in action and thus property that can be held on trust, goes some way towards addressing, at least within Singapore, the observation in the UK Jurisdiction Taskforce’s Legal Statement on Crypto Assets and Smart Contracts that: “It is important to understand whether the many statutory and common law rules applicable to property apply also to crypto assets and, if so, how? Of particular significance are the rules concerning succession on death, the vesting of property on personal bankruptcy, the rights of liquidators in corporate insolvency, and tracing in cases of fraud, theft or breach of trust. It would, to say the least, be highly unsatisfactory if rules of that kind had no application to crypto assets.”
However, while the Singapore High Court’s decision in ByBit is certainly a welcome one and provides useful clarity, some important questions remain. One such question is whether all crypto assets can be held on trust.
The ByBit decision constituted a broad analysis about the legal possibility of holding crypto or digital assets on trust. The Court was also careful to clarify that its determination was not specific to USDT, and that a feature specific to USDT – that any holder of USDT had a contractual right to redeem USDT for US dollars – was “not necessary” for such an asset to be capable of being held on trust. These certainly suggest that the Court was not intending to confine its holding specifically to USDT.
However, a closer reading of ByBit shows that in coming to this decision, the Singapore High Court held it important that the crypto asset in question met the Ainsworth requirements in that it was definable, identifiable by third parties, capable of assumption by third parties, and had some degree of permanence or stability.
Given that crypto assets are not a homogenous class of digital assets and each cryptocurrency is unique as it is ultimately defined by reference to the rules of the system in which it exists, any party hoping to rely on the Court’s reasoning in ByBit would do well to consider if the crypto asset in question has any features that detracts from this definition.
Another aspect to think about is the legal classification to be applied to crypto assets. The High Court in ByBit based its conclusion that crypto assets are property capable of being held on trusts on its classification of such assets as “choses” or “things” in action. This stands in contrast to the approach advocated by many, especially in the UK, that crypto assets ought to be a sui generis third category of property. It remains to be seen whether the Singapore courts will continue developments in this direction, or whether they will be any consequences arising from the courts’ decision either way.
Furthermore, while ByBit involved the relatively straightforward scenario of an attempt to recover stolen crypto assets from the person who appears to have stolen them, there remain unknowns surrounding the possibility of recovering crypto assets from downstream purchasers of stolen assets, especially where this would give rise to the interplay of countervailing legal concepts like the nemo dat rule (essentially, that “no one may give away what he does not own”) on the one hand and equity’s darling (the bona fide purchaser for value without notice of any earlier fraud) on the other.
The Court’s holding in Bybit that crypto assets could be held on trust was made in the context of declaring a constructive trust over the stolen crypto assets. When the issue is one of other forms of trust, such as an express trust or a resulting trust, the relevant legal requirements for that type of trust still have to be separately satisfied. For example, any party hoping to utilise trusts to hold crypto assets from an insolvency or wealth planning perspective would also do well to note that Singapore courts will not uphold sham or illegal trusts.
MAS Publishes Investor Protection Measures For Digital Payment Token Services
As stated above, relevant developments in Singapore have not been solely court-led. On 3 July 2023, following a public consultation on proposed regulatory measures to enhance investor protection and market integrity in digital payment token (DPT – a term in Singapore broadly synonymous with cryptocurrency) services, MAS announced new requirements for DPT service providers. This comes on the back of a series of prior measures introduced to protect the general public, including a ban since 2022 on the marketing or advertisement of services by cryptocurrency service providers.
One of the key new requirements that will be introduced is for DPT service providers to safekeep customer assets on a “statutory trust”, the idea being that this might help to mitigate the risk of loss or misuse of customers’ assets, and facilitate the recovery of customers’ assets in the event of a DPT service provider’s insolvency.
Interestingly, MAS’s new requirement that DPT providers must safekeep customer assets under a statutory trust was published even before the Court’s decision in ByBit confirming that such crypto assets were property which could in fact even be held on trust.
It remains to be seen how Singapore crafts the actual legislative amendments to give effect to these new requirements at law, and the extent to which the Singapore legislature takes into account the court decisions described earlier in doing so.
MAS Proposes Standards For Digital Money
Another recent significant development on the MAS front was its proposal, on 21 June 2023, of standards for digital money. MAS’s Purpose Bound Money (PBM) Technical Whitepaper proposes a common protocol to specify conditions for the use of digital money such as central bank digital currencies (CBDCs), tokenised bank deposits, and stablecoins on a distributed ledger. The white paper was developed in collaboration with the International Monetary Fund, Banca d’Italia, Bank of Korea, financial institutions and FinTech Firms.
Given global trends, Singapore’s latest foray into ‘Purpose Bound Money’ should come as no surprise. It has been estimated that at present some 130 countries are exploring a CBDC, and 11 countries have fully launched a digital currency.
Singapore will have to grapple with the same issues of privacy, financial stability, constraints on use, and digital readiness as any other jurisdiction considering such digital assets. However, such PBMs are also likely to raise interesting questions for the Singapore courts moving forward, including on the holding in ByBit that crypto assets are property capable of being held on trust because they satisfy the Ainsworth requirements and constitute a chose in action.
For example, some possible conditions that may be specified in a PBM are an expiry date or restraints on use. However, the former may be said to contravene the Ainsworth requirement that it must have some degree of permanence or stability, and the latter could contravene the requirement that it must be capable of assumption by third parties.
The Way Forward
Given the nascency of the crypto assets space, we are likely to see a symbiotic relationship between the Singapore courts and legislature, towards implementing a legal framework under which crypto assets and their participants (including investors, holders and service providers) can operate. At this juncture, there is a clear trend towards strengthening protections for investors in cryptocurrency, extending even to restrictions on the way retail investors can partake in cryptocurrency trading or speculation.
Nevertheless, given the uncharted nature of such territory, the Singapore courts might potentially be playing catch-up for a while, as the space tends to remain driven first by developments in technology, then by developments in legislation and regulation. Recognition of a sui generis third category may ameliorate some difficulties insofar as it would allow further legal developments on a blank slate, although that could also represent a significant step towards the unknown. ByBit is unlikely to be the last that we hear about legal developments in this space.
1 The ByBit decision also comes after the earlier case of David Ian Ruscoe & Malcolm Russell Moore v Cryptopia Ltd  NZHC 718, where the New Zealand High Court had determined, in what appears to be a first across common law jurisdictions, that various cryptocurrencies could be viewed as ‘property’ and capable of being held on trust.
2 Referring to an earlier English case before the House of Lords, National Provincial Bank v Ainsworth  1 AC 1175, which dealt with issues of property law.
3 ByBit at 
4 ByBit at  and 
5 ByBit at 
6 UK Jurisdiction Taskforce, “Legal Statement on Cryptoassets and Smart Contracts” The LawTech Delivery Panel (November 2019) <https://technation.io/about-us/lawtech-panel/ >
7 See [4.67]-[4.100] of the UK Law Commission No. 256 Digital assets Consultation paper dated 28 July 2022
8 See e.g. Lau Sheng Jan, Alistair v Lau Cheok Joo Richard  SGHC 196
9 MAS Media Release dated 3 July 2023, “MAS Publishes Investor Protection Measures for Digital Payment Token Services” <https://www.mas.gov.sg/news/media-releases/2023/mas-publishes-investor-protection-measures-for-digital-payment-token-services>
10 See e.g. the definition by the Inland Revenue Authority of Singapore: “A digital payment token refers to any cryptographically-secured digital representation of value that is used or intended to be used as a medium of exchange” < https://www.iras.gov.sg/taxes/goods-services-tax-(gst)/specific-business-sectors/digital-payment-tokens#:~:text=A%20digital%20payment%20token%20refers,as%20a%20medium%20of%20exchange>
11 MAS Media Release dated 21 June 2023, “MAS Proposes Standards for Digital Money” <https://www.mas.gov.sg/news/media-releases/2023/mas-proposes-standards-for-digital-money#3>
Paul is a Partner at WongPartnership LLP in Singapore, where he works in the Specialist & Private Client Disputes and the White Collar & Enforcement Practices. He has an active dispute resolution practice dealing with both commercial disputes, including shareholder / partnership and contractual disputes, as well as criminal law matters involving corruption, fraud and other white collar crime. He has dealt with cryptocurrency-related matters both in the context of civil court disputes as well as criminal and regulatory investigations. Paul has appeared before all levels of the Singapore courts. He serves as an advocacy trainer for the Bar course in Singapore, and is a Contributing Editor to Singapore Civil Procedure, the leading title on the civil Rules of Court in Singapore.
Chin Yan Xun Asher
Chin Yan Xun Asher is a Senior Associate at WongPartnership LLP, Singapore, where he specialises in Specialist & Private Client Disputes.