Law from Code? – A Social-Ontological Perspective on Crypto-tokens and Possible Rights in Them

Crypto-tokens and the underlying blockchain technology are currently the subject of legal discussions and legislative initiatives worldwide. Across many jurisdictions, there is debate about whether rights exist in crypto-tokens and, if so, what kind of rights - for example property rights - and how token holders should be legally protected.

This presentation examines possible rights in crypto-tokens under German private law. To begin with, the presentation will provide an overview of the legal situation in Germany and point out where problems and obstacles exist. It will be shown that a gap in legal protection exists which German law is currently unable to close. Although tokens, unlike traditional data, appear more like (digital) objects or things, they are not granted absolute legal protection. As a result, holders of tokens face difficulties in protecting their position, even though they have factual control over the token. This situation is unsatisfactory in light of the fact that society attributes significant value to tokens and widely uses blockchain technology with its inherent code-based rules and factual allocation mechanisms, thereby accepting and making use of these rules.

The presentation therefore proposes an alternative approach that focuses on the social dimension of tokens, their usage, and their perception within society. For this purpose, the presentation draws on the social ontology of the U.S.-American philosopher John R. Searle, which helps explain how collective recognition within a society gives rise to rights and institutions such as property or money.

This approach is not only applicable to German law but, in principle, to any legal system, corresponding to the decentralised nature of blockchain technology. Moreover, it offers a perspective on how to deal with code and algorithms that enjoy widespread societal acceptance and regulate human behaviour in ways similar to law, despite not originating from state authority. At the same time, it allows us to gain insights into the relationship between positive law and social norms.