The rapid advancement of technology has ushered in a new era—the digital revolution of assets—where physical assets are transformed into digital representations and digital data itself becomes a valuable asset. This transformation is not merely technical; it's reshaping economies, legal frameworks, and personal wealth management. Digital assets are now integral to modern social and economic life, with real-world asset tokenization on the horizon and digital asset exchanges emerging globally. Yet, despite their growing significance, legal systems worldwide struggle to define, classify, and protect these assets effectively.
While countries like the U.S., UK, Singapore, and Germany have begun recognizing digital assets as property under certain conditions, China’s legal framework remains ambiguous. The Civil Code acknowledges network virtual property, but fails to clearly define or categorize digital assets, leaving critical questions about ownership, inheritance, trust, and investment unresolved. This article explores the global landscape of digital asset classification, analyzes legal developments abroad, and proposes a path forward for China through comprehensive digital asset legislation.
Understanding Digital Assets: Definition and Scope
At its core, a digital asset is any piece of data that holds value and exists in electronic form. This includes everything from cryptocurrencies and NFTs to online accounts, digital documents, and even loyalty points. However, the lack of a standardized definition creates confusion across jurisdictions and industries.
The Confusion in Terminology
The terms digital asset, virtual asset, cryptoasset, token, and digital currency are often used interchangeably—but they are not synonymous. For example:
- The Financial Action Task Force (FATF) uses “virtual asset” to describe value represented digitally.
- Some jurisdictions limit the term to blockchain-based assets like Bitcoin.
- Others include non-blockchain data such as emails or cloud files.
This inconsistency complicates regulation, taxation, and legal enforcement.
👉 Discover how modern platforms are redefining digital ownership
Two Key Trends: Digitization vs. Digitalization
To understand the evolution of digital assets, we must distinguish between two complementary processes:
1. Asset Digitization
This refers to converting physical assets—like real estate or stocks—into digital tokens on a ledger (often blockchain). These tokenized assets represent ownership rights and can be traded efficiently without intermediaries.
Example: A $1 million apartment can be divided into 100,000 tokens, each worth $10. Investors buy tokens instead of the entire property, enabling fractional ownership.
2. Digital Asset Creation
These are native digital items—such as cryptocurrencies (Bitcoin), utility tokens (Ethereum-based apps), or NFTs—that have no physical counterpart. They exist purely in digital ecosystems.
Both trends expand financial inclusion and market efficiency but require robust legal recognition to ensure security and trust.
Global Legal Perspectives on Digital Assets
Countries are adopting varied approaches to regulate digital assets. Here’s how key jurisdictions define and treat them:
United States
Under the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), digital assets are defined as “electronic records in which an individual has a right or interest.” This includes emails, social media accounts, and crypto wallets.
Wyoming’s Digital Asset Law goes further by classifying digital assets into:
- Virtual currency (e.g., Bitcoin)
- Digital consumer assets (e.g., game items)
- Digital securities (regulated under securities law)
This three-tier model provides clarity for inheritance, lending, and trading.
United Kingdom
The UK Jurisdictional Taskforce (UKJT) concluded in 2019 that cryptoassets qualify as property under English law. Courts have upheld this view in cases like Quoine Pte Ltd v B2C2 Ltd, affirming that digital assets can be held in trust.
However, challenges remain—especially around possession, since traditional property law requires physical control.
Singapore & New Zealand
Courts in both nations have ruled that cryptocurrencies are capable of being held in trust, reinforcing their status as legitimate assets. In Ruscoe v Cryptopia Ltd, New Zealand’s High Court recognized crypto holdings as property during insolvency proceedings.
European Union
The upcoming Markets in Crypto-Assets (MiCA) regulation will establish a unified framework across EU member states, regulating stablecoins, utility tokens, and security tokens while protecting consumers and ensuring market integrity.
Russia & Japan
- Russia’s Digital Financial Assets Law treats blockchain-based rights as securities-like instruments.
- Japan’s Payment Services Act distinguishes between payment, utility, and investment tokens—though NFTs fall outside current definitions.
These diverse models highlight the need for a harmonized global standard—but also offer valuable lessons for emerging legal frameworks.
Why Clear Definitions Matter: Legal and Financial Implications
Without precise categorization, digital assets face uncertainty in multiple domains:
Inheritance & Estate Planning
Many people store valuable data online—photos, emails, crypto wallets—but heirs often cannot access these after death due to restrictive Terms of Service (ToS). Clear laws allowing executors to manage digital estates are essential.
Trusts & Financial Instruments
Trusts are powerful tools for wealth management. If digital assets aren’t recognized as property, they cannot serve as trust assets—limiting investment opportunities and intergenerational planning.
Bankruptcy & Insolvency
In corporate failures, determining who owns digital assets (e.g., company-held crypto) affects creditor recovery. Legal clarity ensures fair distribution.
Investment & Market Development
Tokenized securities promise faster settlement and lower costs. But without regulatory certainty, institutional investors hesitate to participate.
Current Challenges in China’s Legal Framework
China’s Civil Code Article 127 mentions “data and network virtual property” but offers no clear definition or protection mechanism. As a result:
- Courts differ on whether digital assets are property.
- Inheritance cases involving WeChat accounts or game currency lack consistent rulings.
- Cryptocurrencies like Bitcoin aren’t legal tender but may still be treated as virtual commodities.
Scholars debate whether digital assets should be classified under existing categories like movable property—or if a new legal category is needed.
Toward a Comprehensive Digital Assets Law
To address these gaps, China should consider two complementary steps:
1. Expand Interpretation of the Civil Code
Lawmakers can interpret Article 127 broadly to include all forms of digital value—both blockchain-based (NFTs, crypto) and non-blockchain (email, cloud data).
This would affirm that:
- Digital assets are private property
- Owners have rights to use, transfer, inherit, and pledge them
- Unauthorized access constitutes infringement
2. Enact a Dedicated Digital Assets Protection Law
A standalone law could:
- Define core categories: cryptoassets, tokenized real-world assets, personal digital data
- Establish ownership rules based on private key control
- Clarify inheritance procedures and fiduciary duties
- Regulate issuance of security tokens and stablecoins
- Enable digital asset-backed loans and trusts
Such legislation would position China at the forefront of the digital economy while safeguarding user rights.
FAQ: Common Questions About Digital Assets
Q: Are digital assets legally recognized as property?
A: In several jurisdictions—including Singapore, the UK, and Wyoming—they are. Courts apply traditional property tests: determinability, identifiability, transferability, and durability.
Q: Can I inherit someone’s cryptocurrency?
A: Yes—if you have access to their private keys or recovery phrase. Legal recognition helps executors gain access through court orders.
Q: What happens to my NFT if I die?
A: Like other digital assets, NFTs can be included in wills. However, platforms may restrict transfers unless supported by smart contracts or platform policies.
Q: Is owning digital assets risky?
A: Risks include loss of access (forgotten passwords), fraud, and market volatility. Using secure wallets and legal documentation reduces exposure.
Q: Can businesses use digital assets for financing?
A: Absolutely. Tokenized equity or revenue-sharing models allow startups to raise capital globally without traditional intermediaries.
Q: Does China ban all digital assets?
A: No—while cryptocurrency trading is restricted, the government supports blockchain innovation and has issued state-backed NFTs for cultural events.
👉 See how blockchain is transforming asset ownership today
The Path Forward: From Concept to Regulation
The convergence of finance, technology, and law demands a forward-thinking approach. As more value shifts into digital form—from personal memories to billion-dollar investments—the absence of clear rules creates risk and inefficiency.
China has an opportunity to lead by creating a comprehensive Digital Assets Protection Law that:
- Distinguishes between types of digital assets
- Affirms property rights based on control
- Supports innovation while ensuring consumer protection
Only with such a framework can individuals and institutions fully harness the potential of the digital economy.
👉 Explore secure ways to manage your digital future
By embracing legal clarity alongside technological progress, societies can ensure that the digital revolution of assets benefits everyone—not just tech pioneers or financial elites. The time for action is now.