Conversion of cryptoassets

It is common for cryptoassets to be stolen, which raises the legal issue of whether cryptoassets can be converted. Under the current law, the tort of conversion applies only to tangibles. Cryptoassets cannot be converted because they are intangible. However, this article argues that it is arbitrary to determine whether cryptoassets are amenable to conversion based on the tangible/intangible distinction. Refusing to extend the tort of conversion to cryptoassets will lead to unfair treatment between cryptoassets and other assets. It will also provide inadequate protection for cryptoassets, which can be interfered with in ways similar to tangibles. This article argues that the tort of conversion should be extended to cryptoassets because they are property capable of possession. A tort for conversion of cryptoassets is established when a defendant has deliberately and exclusively interfered with a claimant's cryptoassets, and the defendant does not have a defence. Since conversion is a tort of strict liability, extending the tort to cryptoassets may create uncertain legal risks to third parties. To protect innocent third parties robustly, five defences should be established: innocent purchaser defence, abandonment, consent, self-help and safe harbour.