Jurisdictions differ in how they legally categorize cryptoassets. The divergence in the US is even more marked: the US Securities and Exchange Commission classifies digital assets as securities, while the US Commodities Future Trading Commission deems Bitcoin and Ethereum to be commodities. The EU's Markets in Crypto-Assets Regulation distinguishes asset referenced tokens, e-money tokens and utility tokens.

In 2019, the UK Jurisdiction Taskforce (UKJT) concluded in its Legal statement on cryptoassets and smart contracts that “cryptoassets have all of the indicia of property”, and the English courts have recognised cryptoassets as property in cases such as AA v Persons Unknown [2019] EWHC 3556 (Comm).

The legal identity of decentralised autonomous organisations (DAOs), organisations constructed through code, deployed on blockchain and typically managed communally by token holders, depends on the structure chosen for that DAO and the legal principles in the relevant jurisdiction (although it may not be clear in which jurisdiction a DAO “exists”, particularly if it lacks formal legal personality). DAOs have been recognised as legal entities if they have a “legal wrapping”; without one, courts in certain jurisdictions in the US have threatened to recognise them as partnerships with unlimited liability. The Law Commission of England & Wales in its July 2024 scoping paper on DAOs concluded that “there is no current need to develop a DAO-specific legal entity for England and Wales, however, the Government should keep this matter under review”.

Although difficult to precisely define, smart contracts are self-executing contracts implemented using code and performed, at least in part, by a network system without human input. They deploy blockchain technology to provide insulated and tamper-proof operation.

The “code is law” principle, which states that the execution of the smart contract is final, may, when taken to the extreme, be seen as envisaging that anything “allowed” by the smart contract is “legal” despite any adverse or harmful effects. This interpretation clashes with traditional contractual concepts which hinge on party intent, such as mistake, duress and illegality. However, it is likely that these concepts will need to be considered alongside code in some smart contract-related disputes.

For example, performance could be affected by an event extrinsic to the code, such as a system failure. Further, where code mishandles ambiguities or operates in an unforeseen or unintended manner, the “wronged” party may be unwilling to surrender to the output of the code and seek to rely on traditional principles under the smart contract's governing law (which itself may be a subject of dispute, if not specified by the parties).

Valuing digital assets and quantifying loss in digital disputes can bring novel challenges. Poor regulation of crypto trading platforms means a lack of publicly available information to facilitate market-based valuations. Extreme volatility complicates quantification of damages, including the point at which loss is assessed, as shown by Fantom Foundation Ltd v Multichain Foundation Ltd [2024] SGHC 173, although this may be surmounted to an extent if evidence of blockchain records, which are immutable and timestamped, is admissible.