This article is written by Manvika Kalia of Lovely Professional University, Punjab.
Few doctrines in private international law have the staying power of lex situs, the principle that rights over property are governed by the law of the place where that property physically sits. As legal maxims go, it has the virtue of simplicity. If you want to know which law governs a dispute about a painting, a ship, or a bale of cotton, find the jurisdiction where those things are located and look to its rules. For centuries, that approach worked well enough because property was, by definition, somewhere you could point to on a map.
That map has become considerably harder to read. Today, enormous concentrations of wealth exist not in warehouses or vaults but on distributed ledgers, Bitcoin, Ether, NFTs, tokenised securities, and data assets that are maintained simultaneously across server nodes scattered across dozens of countries. When a creditor tries to enforce a security interest in Bitcoin hosted in Iceland, Singapore, and Ohio, the question ‘where is this property?’ stops being a geographical question and starts feeling like a philosophical one. The asset is, in a meaningful sense, everywhere and nowhere at the same time.
This piece examines how we got to this impasse. It traces the origins and internal logic of lex situs, follows its gradual strain under the weight of mobile and intangible property, and then considers the genuinely novel challenges posed by digital assets. Along the way, it looks at what legislators, courts, and international bodies have managed to produce so far in response. The argument advanced here is not that physical location has become irrelevant; it has not, but that the law needs a more nuanced set of connecting factors capable of capturing where people and institutions are anchored even when their assets float freely in cyberspac
THE CLASSICAL DOCTRINE: LEX SITUS AND ITS RATIONALE
The historical alternative to lex situs was the maxim mobilia sequuntur personam movables follow the person, which submitted movable property to the law of the owner’s domicile. It had a certain conceptual tidiness: one person, one domicile, one applicable law. In practice, though, it created real difficulties wherever movables crossed borders or changed hands, and courts progressively abandoned it.
The decisive shift came through cases like Cammell v. Sewell, which established the foundational proposition that the validity of a transfer of movable property is determined by the law of the jurisdiction where the property was situated at the time of that transfer. The court’s core reasoning was straightforward: enforcement happens locally, so the local courts will naturally apply their own law, and any rule that ties the governing law to the place of enforcement works better.
That enforcement rationale proved broadly persuasive. The Restatement (Second) of Conflict of Laws endorses lex situs as the primary rule for most property disputes, treating the situs at the moment of the relevant transaction as the governing law. The logic is not merely theoretical: Courts ordering delivery of possession, recognition of title, or cancellation of a competing interest need the coercive machinery of a state behind them, and that machinery operates within borders.
A rule that keeps applicable law and enforcement jurisdiction aligned reduces the risk of courts being asked to apply foreign law that their own sheriffs cannot give effect to.
For tangible movables, this works tolerably well, and a degree of legislative harmonisation has reinforced it. Article 9 of the Uniform Commercial Code governs security interests in personal property by reference to the debtor’s location rather than strict situs. The EU’s Rome II Regulation submits property-related torts to the law of the country where the property was situated when the relevant event occurred, and various international conventions adopt comparable location-based connecting factors for commercial transactions. The system is imperfect, but it has a recognisable internal coherence.
THE PROBLEM OF MOBILITY: CHATTELS IN TRANSIT AND INTANGIBLES
Even before digital assets arrived, the lex situs doctrine was under strain from ordinary commercial practice. The problem is what we might call the moving-target difficulty: goods that are physically mobile change their situs between the moment a security interest is created and the moment it is enforced, potentially activating multiple competing legal regimes in a single transaction. A painting lawfully pledged as collateral in Paris, transported through Frankfurt, and auctioned in London could, in principle, be subject to the property rules of three different countries.
The United States addressed this pragmatically. Rather than insisting on a strict situs analysis, Article 9 of the UCC uses the debtor’s principal place of business as its primary connecting factor for secured transactions. This reflects a judgment that commercial certainty matters more than geographical purity: a creditor who extends credit secured by a fleet of trucks needs to know which state’s perfection rules apply, and that question should not change every time a truck crosses a state line.
Intangible property posed deeper structural problems. Debts, contractual rights, intellectual property licences, and financial instruments have no physical location in any meaningful sense.
Courts and legislators responded by constructing artificial situs rules: a debt is located where it is payable; a negotiable instrument is where the document is; shares in a company are at the company’s registered office. These fictions were always acknowledged as legal constructs rather than geographical facts, but they served the purposes of predictability and definiteness adequately for most of the twentieth century.
The Uniform Electronic Transactions Act made some progress on recognising electronic records as equivalents to written instruments, but it left the conflict-of-laws dimensions largely untouched. The stage was set for a far more fundamental disruption.
DIGITAL ASSETS AND THE DISSOLUTION OF PHYSICAL SITUS
Blockchain-based assets represent something qualitatively different from anything the lex situs doctrine was designed to handle. A unit of Bitcoin does not exist in any particular place.
Technically, it is an unspent transaction output (UTXO) — a record maintained simultaneously across thousands of nodes distributed around the globe. There is no authoritative server, no central ledger, and no jurisdiction whose law can lay exclusive claim to the asset by virtue of its physical presence there. Asking where Bitcoin ‘is’ in the lex situs sense is a bit like asking where a piece of music is located: the question does not quite parse.
Three candidate solutions have attracted serious scholarly attention. The first is to apply the law of the jurisdiction where the controlling private key is held. This has obvious intuitive appeal: control over the private key is control over the asset, but that control collapses quickly under scrutiny.
Multi-signature wallets require keys held in multiple jurisdictions; custodial arrangements separate the key from the beneficial owner; and hardware wallets can be used from one country while stored in another. The private key, in other words, is not a reliable anchor.
The second approach revives the old mobilia sequuntur personam logic by submitting digital assets to the law of the holder’s domicile. A person’s domicile at least changes less frequently than the location of their devices, giving the rule a degree of stability. The difficulty is that it requires explicit legislative adoption to work consistently and may cut across creditor-protection frameworks that were built around situs-based enforcement.
The third approach is sometimes called lex cryptographia: the idea of treating the smart contract rules encoded in the blockchain as a self-executing legal order, effectively allowing private code to determine its own governing law. It is analytically elegant but raises serious concerns. Private code systems have no constitutional accountability, offer no judicial review, and cannot accommodate equitable claims or public policy exceptions. Permitting any private network to determine its own governing law would be, at best, an invitation to regulatory arbitrage and, at worst, an abdication of state authority over property rights.
Non-fungible tokens add further complexity. An NFT is a unique cryptographic certificate of ownership, typically of a digital file, where the token lives on the blockchain, but the underlying asset may be stored on a centralised server in an entirely different jurisdiction. A thorough conflict-of-laws analysis might therefore need to engage two separate situs questions for the same transaction, and those questions may not yield the same answer.
LEGISLATIVE AND JUDICIAL RESPONSES: SEARCHING FOR NEW CONNECTING FACTORS
Legislators and courts have been grappling with these questions with increasing urgency, and while no universal consensus has emerged, broad trends are visible.
The European Union’s Markets in Crypto-Assets Regulation (MiCA) establishes a comprehensive framework governing the issuance and trading of crypto-assets across the EU, but it was primarily designed as a market-regulation instrument rather than a private-law code.18 It leaves member states to apply their own existing conflict-of-laws rules to private property disputes, a gap that risks producing inconsistent results within the single market.
The UNIDROIT Principles on Digital Assets and Private Law, adopted in 2023, represent the most systematic international effort to date. The principles propose that the applicable law for digital assets be determined by the rules of the relevant blockchain or distributed ledger system, where those rules designate an applicable law or, failing that, by the parties’ own choice of law, or as a last resort by the law of the jurisdiction most closely connected to the system’s operators. The principles try to honour party autonomy while supplying workable defaults for cases where no designation exists.
In England and Wales, the Law Commission has been pushing the frontier most actively. It’s 2023, the reports on digital assets recommended that English courts recognise digital assets as a third, suigeneris category of personal property distinct from both things in possession and things in action, with applicable law determined by agreed governing law or, absent choice, the law most closely connected to the token’s issuance. The Property (Digital Assets, etc.)
The Act gave partial statutory force to this recommendation, confirming that digital assets are capable of being property under English law, 2021, but the Commission did not stop there. In June 2025, it published a full consultation paper on private international law and digital assets, closing in September 2025.
The Commission identified wholly decentralised applications of distributed ledger technology as posing particularly novel challenges, suggesting that courts should adopt a flexible, multi-factor approach rather than mechanically identifying a single applicable law, taking into account the parties’ reasonable expectations, the terms of any relevant smart contracts or protocols, and overall considerations of fairness.
Judicial developments have illuminated the issues from a different angle. The Singapore International Commercial Court, in Bybit Fintech Ltd v Ho Kai Xin, 22, recognised that cryptocurrency could be held on trust and ordered a proprietary remedy in respect of misappropriated tokens. The court applied Singapore law based on the plaintiff’s principal operations, a result consistent with a closest-connection analysis but not explicitly rooted in lex situs logic.
Meanwhile, a judgment of the Tokyo District Court in April 2024, the first in Japan to address the law applicable to proprietary rights over Bitcoin under Japanese private international law, explicitly invoked the lex situs rule to resolve a conflict arising from the movement of Bitcoin between legal systems, treating control of the private key as a connecting factor for locating the disputed asset.
UNIDROIT Principles on Digital Assets and Private Law, Principle 5 (2023). The principles entered into force following adoption at the 2023 UNIDROIT General Assembly.
Property (Digital Assets etc) Act 2025 (UK), giving statutory recognition to digital assets as a third category of personal property. Note: The Act’s short title was updated from ‘Digital Assets (Legal Recognition) Act 2023, following the enactment of the Property (Digital Assets etc) Bill.
Bybit Fintech Ltd v Ho Kai Xin [2023] SGHC(I) 20 (Singapore International Commercial Court). For comparative analysis, see Anurag Bana & Ammar Osmanourtashi, Blockchain and Private International Law: Implications for Crypto, Payment Systems, Digital Wallets, and Jurisdictional Concerns, INT’L BAR ASS’N (2023).
In the United States, Wyoming led the legislative charge by enacting statutes that recognise digital assets as a category of property and provide that their situs is the jurisdiction where the person controlling the private key is located. It is a pragmatic rather than theoretically pure solution, constructing an artificial situs for digital assets, much as earlier law constructed artificial situs rules for debts and shares; but it has the considerable virtue of working within a recognisable doctrinal framework.
THE RESIDUAL RELEVANCE OF PHYSICAL LOCATION
It would be a mistake, amid all this doctrinal turbulence, to conclude that physical location has become irrelevant. It has not, and it retains importance in at least three distinct respects.
The most fundamental point is that the enforcement of any property right ultimately requires physical intervention. Arrests, seizures, orders directed at exchanges and custodians, all of these require the coercive power of a state operating within a defined territory.
A court in New York can order a cryptocurrency exchange incorporated in New York to freeze a customer’s account, and that order will be effective precisely because the exchange’s staff, operations, and licences are physically anchored to that jurisdiction. The asset may be distributed across the globe; the institution responsible for it is not.
Second, the major regulatory frameworks, anti-money laundering rules, and know-your-customer requirements, securities regulation, and MiCA itself are applied based on where exchanges, custodians, and issuers conduct business.
A token offered to retail investors in the EU is subject to MiCA regardless of where the issuer claims its protocol is ‘located’. The economic reality is that intermediaries, who have a physical presence, function as the pivot point for both regulatory and private law purposes alike.
Third, where digital assets are held not through a self-custody wallet but with a regulated intermediary, which accounts for most retail cryptocurrency holdings, the intermediary’s jurisdiction effectively becomes the functional situs. This parallels the PRIMA principle developed in EU law for intermediated securities, which locates those securities at the place of the relevant intermediary account. Applying equivalent logic to custodial digital assets would partly rehabilitate lex situs without requiring courts to resolve the unanswerable question of where a blockchain ‘is’.
TOWARDS A NEW FRAMEWORK: PARTY AUTONOMY, CLOSEST CONNECTION AND REGISTERED SITUS
What the foregoing analysis suggests is not that lex situs must be abandoned but that it needs to be rebuilt around three organising principles: party autonomy, closest connection, and a registered or constructive situs for proprietary purposes.
Party autonomy should take priority. Where a blockchain protocol, smart contract, or token the issuance document designates a governing law; that designation ought to be respected, provided it bears a reasonable connection to the transaction and does not override mandatory rules or public policy. The Hague-Visegrád Principles on Choice of Law in International Commercial Contracts provide a ready-made model, and there is no compelling reason why the same respect for party autonomy that applies to the contract should not extend to the property rights created and transferred through digital asset protocols.
Where no choice is made, courts should apply a closest-connection analysis, taking into account the token issuer’s principal administration, the jurisdiction of the custodian or exchange, any concentration of nodes (where ascertainable), and the debtor’s habitual residence. This is admittedly less crisp than a single rule, but it honestly reflects the complexity of distributed systems and is consistent with the general direction of modern conflict-of-laws methodology including the approach now being actively developed by the Law Commission of England and Wales.
For security interests and proprietary claims specifically, a registered or constructive situs model analogous to Article 9 UCC’s use of the debtor’s location offers the best compromise between certainty and realism. Under this approach, digital assets are treated as located in the jurisdiction where they are officially registered, or absent registration, where the controlling person habitually resides. It creates a defined situs without sending courts on impossible factual investigations into the geography of cryptographic keys.
The UNIDROIT approach of deferring to the rules of the relevant blockchain system, where those rules designate applicable law, is attractive as far as it goes. But it needs to be conditioned on the designated law meeting minimum standards: meaningful judicial access, adequate creditor protection, and basic consumer rights. Unconditional deference to system rules risks permitting the operators of private networks to carve themselves out of the mandatory protections that state law provides. Any serious reform framework will need to build in these constraints.
CONCLUSION
Lex situs became the dominant rule in property conflict of laws because it offered something genuinely valuable: clarity about which law applied, confidence that enforcement was practically possible, and a correspondence between legal governance and physical reality.
In a world where property can exist without a physical place, distributed across nodes, held in cryptographic keys, representing economic value that is entirely untethered from geography, that correspondence has dissolved.
But the doctrine is not obsolete. Location retains significance wherever human beings and institutions remain physically anchored: exchanges, custodians, issuers, and courts all operate within identifiable territories. The enforcement of any legal right, however virtual its subject matter, ultimately depends on the coercive power of a state acting within its physical domain.
Geography, in this sense, is not going away; it is just shifting from the location of assets to the location of the people and institutions that control, custody, and account for them.
What must change is the reflexive application of an eighteenth-century rule to twenty-first-century assets. The law needs a layered framework that prioritises party autonomy, uses the closest-connection analysis as a default, constructs artificial situs rules for security interests akin to those already developed for debts and shares, and conditions any deference to private code on compliance with public-law minimum standards. This is not a revolution; it is an evolution.
The animating logic of lex situs, that property rights should be governed by the law of the place most practically connected to their enforcement, remains sound. The task is to work out what ‘place’ means when property has left the physical world behind.
The jurisdictions that answer that question first, with coherence and comprehensiveness, will become the natural legal homes of the digital economy. As the Law Commission of England and Wales, the UNIDROIT working groups, and courts from Singapore to Tokyo are demonstrating in real time that the stakes of getting this right are very high indeed.
REFERENCES
RESTATEMENT (SECOND) OF CONFLICT OF LAWS 222 (AM. L. INST. 1971)
Joseph Story, COMMENTARIES ON THE CONFLICT OF LAWS 429 (8th ed. 1883).
Peter Hay, Patrick J. Borchers & Symeon C. Symeonides, CONFLICT OF LAWS 1072 (5th ed. 2010).
Uniform Commercial Code § 9-301 (2010). For analysis of the rationale behind the debtor- location rule, see Steven L. Schwarcz, Intermediary Risk in a Global Economy, 50 DUKE L.J. 1541, 1555 (2001).
Primavera De Filippi & Aaron Wright, BLOCKCHAIN AND THE LAW: THE RULE OF CODE 101–115 (2018). The concept of lex cryptographia is further developed in Dirk Zetzsche et al., The Decentralised Finance (DeFi) Paradox, 43 EUR. BUS. ORG. L. REV. 63 (2022).
Law Commission of England and Wales, Digital Assets and Electronic Trade Documents in Private International Law: Consultation Paper (5 June 2025) [hereinafter Law Commission 2025 Consultation]. The consultation closed on 8 September 2025; the Commission’s final report is pending. See also Law Commission, Digital Assets as Personal Property: Law Com No 412 (2023).
