Do Bitcoin Markets Have a Conversion Tort Problem?
Ultimately this is still legally undecided, and will remain so until a court decides it. Given that cryptocurrency exchanges have operated in a legal and straightforward way by treating cryptocurrencies as money, I suspect that courts will tend towards preserving the status quo.<p>It is true that in other legal contexts courts and governments have decided to treat Bitcoin as a commodity, but they have no problem calling it &quot;money&quot; when requiring exchanges to register as money service businesses. This is not inconsistent because the definitions of &quot;money&quot; and &quot;commodity&quot; are local to each law; tax law has a narrower definition of money than the laws regulating money service businesses.<p>So it would be perfectly reasonable and consistent to say that, for the purposes of title, cryptocurrencies are treated as money regardless of the way they are treated elsewhere in the law.<p>Even if Bitcoins are treated as a commodity for property law purposes, title is unlikely to follow them in practice. If I take some BTC from source A and put it in an address, and then some BTC from source B and put it in the same address, the two lots of BTC are now mixed up in a single address. In cases where this occurs as a physical process (e.g. putting petrol in a car) the law (at least in the UK, I don&#x27;t know about anywhere else) treats the mixing as a one-way step. So if you put petrol in your car and then find you can&#x27;t pay, the garage is not allowed to siphon the petrol back out because they will inevitably take some of your petrol as well as their own. Once the mixing has happened the petrol is your property, although of course you still have to identify yourself and accept the debt, or be guilty of &quot;making off without paying&quot;. Similar arguments apply to food at a restaurant.<p>By a similar argument, it can be argued that once stolen Bitcoins have been mixed with others in a common address it is not possible to distinguish the stolen bitcoins. Hence they become the property of the person who has acquired them.<p>Whether these arguments will actually persuade a court remains to be seen, but the legal situation is more complex than the original article lets on.