Santaolalla Montoya on Digital Asset Custody and PIL

Cayetana Santaolalla Montoya (Associate Professor of Private International Law; Fellow of the European Law Institute; member of the EAPIL Working Group on Digital Tokens) has just published Digital Asset Custody and Private International Law: Control, Property and Cross-Border Coordination (Atelier, 2026). The book is available in open access. The author has kindly provided the following presentation.

The collapses of FTX and Celsius are usually told as stories of regulatory failure. Read side by side, they also tell a story about private law. FTX’s Terms of Service stated that title to customers’ digital assets remained with them; the collapse nonetheless revealed a substantial shortfall in customer assets. In Celsius, the US Bankruptcy Court for the Southern District of New York held in January 2023 that the Terms of Use had transferred title to assets held in Earn Accounts to the platform, so that those assets formed part of the bankruptcy estate and account holders were left as unsecured creditors. Two platforms, two opposite contractual answers, and in both cases a question that comes before any regulatory analysis: who is entitled to what, and under which law?

The book takes that question as its starting point. It approaches digital asset custody as a private-law institution, and not merely as a licensed activity, and places private international law at the centre of the analysis. Its premise is that, in a digital environment, entitlement is better explained by control than by possession. The premise is not new in substantive law: control is the organising concept of Principle 6 of the UNIDROIT Principles on Digital Assets and Private Law (2023), and English law, following the work of the Law Commission, has recognised in the Property (Digital Assets etc) Act 2025 that a thing may be the object of personal property rights although it is neither a thing in possession nor a thing in action. The book asks what follows for the conflict of laws.

The analysis draws on seven jurisdictions: England and Wales, the United States, Germany, Switzerland, Liechtenstein, Spain and New Zealand. Together they span the common-law and civilian traditions, carry the principal legislative innovations, from the English third category of property to the Swiss DLT legislation and the Liechtenstein TVTG, and supplied the leading custodial insolvencies: Celsius and FTX in the United States, Cryptopia in New Zealand. Alongside them, the book engages with the UNIDROIT Principles, the work of the HCCH Experts’ Group on Digital Tokens and MiCA, and examines the property foundations of custody, the duties and liability of custodians, the treatment of client assets in insolvency, and the arrangements in which no custodian is present at all.

The questions are not academic for the European legislator. Article 75(7) MiCA requires crypto-asset service providers that provide custody to segregate clients’ crypto-assets on three levels: on the distributed ledger, operationally and legally. The first two are factual obligations. The third, by contrast, operates “in accordance with applicable law”, so that the provider’s creditors have no recourse to the assets “in particular in the event of insolvency”. MiCA does not say which law that is.

The Insolvency Regulation offers no easier answer. Article 2(9), which determines where assets are situated for the purposes of the Regulation, including the protection of rights in rem under Article 8, was drafted for shares, book-entry securities, bank accounts and claims. The closest categories do not fit: a blockchain is neither an account maintained by an intermediary nor a register kept “under the authority” of a Member State. And if a client’s position is characterised as a mere claim against the custodian, point (viii) situates it in the Member State of the custodian’s centre of main interests, which is precisely where the Celsius question returns.

Against this background, the book puts forward four proposals:

• a functional connecting factor based on the effective locus of control over key management infrastructure, as an alternative both to a lex rei sitae that has nothing to attach to and to approaches resting solely on the account agreement, and capable of producing a single proprietary law along chains of sub-custodians;
• a Post-Mortem Control Certificate for cross-border succession, built on the division of labour of the European Certificate of Succession: issued by the authority competent for the succession, but recognised wherever control over the means of access is in fact exercised, including by custodians in third States;
• a Competition-Sensitive Conflicts Framework of five criteria, resting on the view that connecting factors are never neutral for the structure of the custody market (which the book itself describes as its boldest and most exposed move);
• ten principles for a transnational private law of digital asset custody.

The book does not claim to settle these questions, and it names its own limits, among them the absence of Asian jurisdictions from the comparative survey. Many of the issues it addresses are currently before the Hague Conference, UNIDROIT and UNCITRAL, as well as national legislators. As its preface puts it: “I have wished only to lay a few stones well, and to leave the rest to the many hands now at work on it.”

Comments and criticism from readers of this blog would be warmly welcome.