People and governments all over the world are quickly recognizing that cryptocurrency has far-reaching implications for banking, finance, regulation, and related fields. And yet, despite the vast proliferation of cryptocurrencies, the intersection of cryptocurrency and civil litigation has barely been addressed in the academic literature. This includes the question of how cryptocurrency should be analyzed for the purpose of minimum contacts à la personal and in rem jurisdiction.
For jurisdiction in connection with cryptocurrency, some of the biggest knots to unravel are the questions of how a minimum contacts analysis should be applied when the court is exercising in rem power over property, and how the situs of an intangible like cryptocurrency should be located. This Article determines that the United States Supreme Court's 1977 decision in Shaffer v. Heitner requires the application of a minimum contacts analysis to in rem and quasi in rem jurisdiction, meaning that the location of property in a forum on its own can no longer serve as the sole basis for jurisdictional power. While a narrow reading of Shaffer would only apply a minimum contacts analysis to quasi in rem exercises of jurisdiction, that interpretation does not comport with the Court's language or subsequent interpretation.
This Article then determines that cryptocurrency is best categorized as intangible property for purposes of a Shaffer analysis. As an intangible property that exists entirely on the Internet, cryptocurrency should be sited based on a two-part framework--(1) cryptocurrency is located at the domicile of the owner, as well as (2) anywhere that the relevant blockchain network can be accessed using the Internet. This conclusion dovetails with Shaffer's requirement of a minimum contacts analysis. The Article's proposed rules tell us in which forums the cryptocurrency is “located,” but due process will always mandate a finding that there is a connection between the cryptocurrency, the forum, and the claims at issue. This removes any concerns about universal jurisdiction and serves as a potent reminder that presence alone is not enough to create court power.
About the Author
Zoe Niesel, Albert Herman Professor of Law, St. Mary's University School of Law; Wake Forest University, 2012; Southern Methodist University, 2008.
Citation
98 Tul. L. Rev. 917