Tuesday, May 17, 2022
Johanna Jacques recenlty published an article entitled, E-Money and Trusts: A Property Analysis, Law Quarterly Review, Forthcoming. Provided below is an abstract of the article:
Following recent guidance by the Financial Conduct Authority, in which it stated that funds received by electronic money institutions in exchange for electronic money are held on trust, this article provides a property analysis of electronic money that refutes this conclusion. It begins by explaining why a trust would not reflect the underlying property relations involved in the issuance of electronic money, whereby customers purchase monetary value in exchange for funds. It argues that this monetary value constitutes a chose in possession in the same way in which this is currently contemplated for cryptoassets. It then goes on to show how the safeguarding regime applicable to electronic money institutions aims to protect issuers’ ability to meet their personal liabilities rather than customers’ property rights in the funds. It finally demonstrates that, as a matter of trusts law, an intention to require a statutory trust cannot be read into the Electronic Money Regulations 2011.