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1 1 (September 28, 2022)

handle is hein.crs/goveixo0001 and id is 1 raw text is: Con gressionaI R.fesearch Service Crypto Assets and Property of the Bankruptcy Estate: An Analysis September 28, 2022 As the effects of the recent sharp decline in cryptocurrency prices, or crypto winter, spread to the dockets of bankruptcy courts, those courts face a novel legal question: Are crypto account holders' assets the property of the account holders themselves, or are they the property of a bankrupt crypto company? The answer to this question yields varying results based on case-specific facts and jurisdiction. For account holders, the determination can mean the difference between immediate access to funds or recovering pennies on the dollar, if anything at all. This Legal Sidebar summarizes four sources of legal authority from which bankruptcy courts might draw when determining the ownership of crypto assets. First, it discusses the Bankruptcy Code's broad definition of property of the estate, along with the Code's exceptions. Second, the Sidebar examines Uniform Commercial Code Articles 8 and 9 and their effect on state property rights. Third, it considers how securities and commodities law offer a middle ground for the ownership question. Fourth, the Sidebar summarizes pending legislation on the issue. The Bankruptcy Estate: Creation and Exceptions A debtor's filing for bankruptcy brings into existence the bankruptcy estate under Section 541(a)(1) of the Bankruptcy Code. The bankruptcy estate is, with limited exceptions listed in subsections (b), (c), and (d) of Section 541, comprised of the debtor's property as of the commencement of the case. An asset's designation as part of the bankruptcy estate has several repercussions for the debtor and creditors. The debtor cannot use estate property as he or she sees fit. The automatic stay that takes effect upon a bankruptcy filing precludes creditors from trying to recover estate property to satisfy debts during the pendency of the bankruptcy. Those assets will be pooled with others to ensure the proper administration of the estate. Given the largely unregulated nature of crypto assets, placement of crypto assets within the bankruptcy estate of a crypto company debtor would be troubling for crypto account holders. This difficulty would Congressional Research Service https://crsreports.congress.gov LSB10832 CRS Legal Sidebar Prepared for Members and Committees of Congress

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