Security rights in crypto-assets: an opportunity for uniform law?

Abstract

Abstract As the market of crypto-assets grows, so does the demand for their use as collateral in cross-border lending transactions. Such a development, though, may pose significant challenges to the main pillars of security rights due to the distinctive features and the nature of crypto-assets. Accordingly, this article identifies and explores the core legal issues, offers guidance in the crypto-collateral area, and assesses the role of uniform law. In the absence of specific legislation, the analysis is conducted under the prism of the international secured transactions framework, as shaped by the International Institute for the Unification of Private Law (Unidroit) and the United Nations Commission on International Trade Law (UNCITRAL) legislative instruments. As such, the article examines whether the current framework suffices to address emerging challenges or contains gaps and limitations that require legislative intervention. The article argues that the increasing use of crypto-assets as collateral may constitute both an opportunity for uniform law to have a leading role in addressing the arising issues and shaping the field, and an opportunity to put new uniform rules in place. This would require both updating the existing legal instruments in line with new technological needs and creating new instruments where necessary. International fora like Unidroit and UNCITRAL would ideally offer the desirable degree of harmonization, or uniformization, in the area of security rights over crypto-assets. Rather than subjecting them to diverging legal rules, developing more uniform approaches would offer consistency, thus increasing legal certainty and supporting technological innovation.