A British court has reaffirmed its existing view that bitcoin is property under English law. It left open, however, whether it can order a debtor to return bitcoin itself, as debate continues over standards for enforcing cryptocurrency debts.

On June 20, blockchain outlet Cryptopolitan reported that in the recently heard London case Hussein v. Fix, the court recognised bitcoin as property but did not reach a clear conclusion on whether an in-kind repayment order is possible.

The case began after the plaintiff sought the return of 7.8 bitcoin in business expenses paid under an existing settlement. The defendant did not appear in court and did not contest the claim.

The court found that bitcoin qualifies as property under English law. It reaffirmed a position that the UK legal community has maintained since a 2019 legal analysis presented by the UK Jurisdiction Taskforce. Recognition as property allows bitcoin holders to assert their rights in civil court.

The core issue in the case, however, was not whether bitcoin is property. The question was whether a court can order a debtor to return a specific cryptocurrency as is, or require payment only of its pound value at the time.

British courts have previously ordered the return of non-cash assets such as shares or physical assets. But there is not yet an established precedent on whether the same principle can be applied to in-kind repayment of cryptocurrency.

The issue is seen as more important because of bitcoin's high price volatility. For example, if a creditor lent 7.8 bitcoin when bitcoin was priced at $30,000 and the price at repayment rises above $100,000, a judgment based only on the pound value at the time could mean the creditor receives far less economic value. Conversely, if the price plunges, the debtor could face a larger burden.

The legal industry is stressing the importance of contract language. International law firm Norton Rose Fulbright, in a digital asset disputes report published in January, said courts in different countries are developing legal principles related to trusts, possession and contractual duties involving digital assets, but enforcement standards for in-kind repayment of cryptocurrency remain unclear in Britain.

As a result, there is analysis that if a contract does not clearly state that repayment is to be made in bitcoin, a court may opt for compensation based on legal tender.

Similar debate is continuing in other countries. South Africa's High Court recently classified 1,680 bitcoin that had been seized as "capital" under foreign exchange control rules. The court cited that bitcoin can be traded in local currency and is used as an investment and payment instrument.

South Africa's central bank and financial authorities, however, maintain that cryptocurrency is not legal tender. The industry views the British trial as potentially becoming an important precedent for enforcing cryptocurrency debts.

Legal experts forecast growing pressure for the British parliament or the Law Commission to set out clearer standards for in-kind repayment of cryptocurrency. With no appellate ruling yet, they say parties lending or borrowing bitcoin need to specify in contracts the repayment method, reference price and payment timing.

Markets are also raising the assessment that the case could be the first test of whether the right to receive bitcoin debt back in actual bitcoin can be legally recognised.