Crypto in the Courtroom: A Legislative Framework for Managing Crypto Assets in Bankruptcy

Authors

Katelyn E. Barker, University of Miami School of Law

Abstract

The rapid rise and subsequent collapse of the cryptocurrency market exposed a critical shortcoming of bankruptcy law: the absence of clear guidelines for the treatment of crypto assets. The Bankruptcy Code—which predates the invention of crypto—fails to account for the unique complexities of crypto assets. Although several crypto bills have been introduced, they fall short of adequately confronting the complex and evolving challenges of crypto bankruptcies. The lack of guidance has forced courts to make consequential decisions with no clear direction, leading to inconsistent outcomes in areas such as crypto asset ownership, valuation, and customer protections.

This Note examines bankruptcy courts’ responses to the downfall of major crypto platforms in 2022 and analyzes the inconsistent rulings that resulted. It further evaluates a proposed crypto bill—the CLARITY Act of 2025—demonstrating its inadequacy in addressing the distinct challenges posed by crypto bankruptcies. Ultimately, this Note argues that comprehensive legislation governing crypto assets in bankruptcy is essential to resolve key challenges and ensure greater predictability. In doing so, it proposes a legislative framework designed to clarify critical issues, provide clear guidance to courts, and protect the interests of all stakeholders in future crypto bankruptcies.

Recommended Citation

Katelyn E. Barker, Crypto in the Courtroom: A Legislative Framework for Managing Crypto Assets in Bankruptcy, 80 U. Mia. L. Rev. 249 (2025)
Available at: https://repository.law.miami.edu/umlr/vol80/iss1/6