Abstract
Can anyone really own virtual tokens such as Bitcoin and Ether? And if so, how should the law protect the rights of the owner? Legal rulings in federal courts have yielded inconsistent policies regarding the applicable remedy when rights in cryptocurrencies are infringed. Some adopt a property rule, granting injunctions and enforcement of property rights against third parties, whereas others restrict the remedy to damages. However, all rulings share one problematic feature: a lack of distinction between types of tokens, resulting in an implicit one-size-fits-all policy. The economic analysis of law suggests that the choice between a property rule and a liability rule should depend on transaction costs, but such costs typically differ across cryptotokens, because tokens are diverse and customizable. Thus, this Article proposes to exploit the common taxonomy of cryptotokens, which distinguishes between security, utility, and currency tokens, as a proxy for transaction costs.
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