[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-292420-105":59,"doc-detail-292420-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","not-your-keys-not-your-coins-unpriced-credit-risk-in-cryptocurrency","Not Your Keys, Not Your Coins - Unpriced Credit Risk in Cryptocurrency","","Cryptocurrency exchanges function as marketplaces and custodians, yet they remain thinly regulated for safety and soundness and face insolvency and hacking risks. The analysis examines how customer custodial holdings might be treated if a U.S. exchange fails, contrasting the debtor–creditor framing with the stronger property protections available for traditional securities, commodities, and cash. It argues that bankruptcy-law technicalities can externalize credit risk onto customers, creating moral hazard when exchanges capture rewards while customers bear disruption and loss.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/not-your-keys-not-your-coins-unpriced-credit-risk-in-cryptocurrency/292420/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/not-your-keys-not-your-coins-unpriced-credit-risk-in-cryptocurrency/292420.png","ImageObject",300,407,{"name":92,"@type":93},"Maeve","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-07","2026-09-17",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"Why do cryptocurrency exchanges pose insolvency and custodial risk to customers?","Question",{"text":113,"@type":114},"Exchanges are thinly regulated for safety and soundness and can face insolvency risks from proprietary investments and from hacking. Because they also hold customers’ deposits, failure can disrupt customer access and treatment of holdings.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"How does U.S. law typically protect traditional custodial assets, and why is crypto different?",{"text":118,"@type":114},"U.S. law provides substantial protections for custodial holdings of securities, commodities, and cash deposits via securities/commodities brokers or banks. No comparable regime exists for cryptocurrency custodial holdings, so bankruptcy courts may treat them as the exchange’s property.",{"name":120,"@type":111,"acceptedAnswer":121},"What credit-risk problem does the paper highlight in cryptocurrency markets?",{"text":122,"@type":114},"It argues that credit risk arises not only from active transacting but also from passive holding, tied to technical bankruptcy and commercial-law details. This can be misunderstood and unpriced by market participants, producing moral hazard as exchanges take rewards while externalizing costs to customers.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},292420,1789651158,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":140,"language":141,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":142,"faqs":143,"seo_title":144,"seo_description":67,"update_tm":130,"read_time":145,"preview_page_count":4},5909877438554,"https://ap-avatar.wpscdn.com/avatar/5600025385ad2bf12a7?_k=1778553567797529272","Not Your Keys, Not Your Coins:  \nUnpriced Credit Risk in Cryptocurrency Adam J. Levitin *  \nCryptocurrency exchanges play a key role in the cryptocurrency ecosystem, serving not only as central marketplaces for buyers and sellers to trade but also as custodians for their customers’ cryptocurrency holdings. Exchanges, however, are thinly regulated for safety and soundness and face major insolvency risks from their own proprietary investments as well as hacking. This piece considers what would happen to customers’ custodial holdings if acryptocurrency exchange in the United States were to fail.  \nAny custodial relationship can potentially be characterized as a debtor– creditor relationship between the custodian and customer, rather than an entrustment or bailment ofproperty. U.S. law gives substantial protection to the custodial holdings of securities, commodities, or cash deposits by securities, commodities brokers, or banks. No such regime exists, however, for custodial holdings of cryptocurrencies. Instead, bankruptcy courts might well deem the custodial holdings to be property of the bankrupt exchange, rather than of its customers. If so, the exchange could use or sell the cryptocurrency, and the customers would merely be general unsecured creditors of the exchange, entitled only to a pro rata distribution of the exchange’s residual assets after any secured or priority creditors had been repaid. And even if the holdings were ultimately deemed property of the customers, the customers would still experience extended disruption to their access to their holdings.  \nCryptocurrencies are designed to address a problem of transactional credit risk—the possibility of “double-spending.” The lesson here is that credit risk can arise not just from active transacting in cryptocurrency but also from passive holding of cryptocurrency. Because this passive holding risk turns on technical details of bankruptcy and commercial law, it is unlikely to be understood, much less priced, by most market participants. The result is a moral hazard in which exchanges are incentivized to engage in even riskier behavior because they capture all of the rewards while the costs are externalized on their customers.  \n* Anne Fleming Research Professor & Professor of Law, Georgetown University Law Center. Thank you to David Gray Carlson, Stephen Keen, Chris Land, Robert Lawless, Charles Mooney, Chris Odinet, David Shemano, Steven Weise, and David Wishnick for helpful comments; and to Maya Pierce for outstanding research assistance.  \n878 Texas Law Review [Vol. 101:877  \nINTRODUCTION .................................................................................. 878  \nI. CRYPTOCURRENCY WALLETS AND EXCHANGES ....................... 886  \nA. Crypto Wallets ................................................................ 886  \nB. Cryptocurrency Exchanges ............................................. 889  \n1. The Need for Centralized Marketplaces .................... 889  \n2. The Dual Functions of a Cryptocurrency“Exchange.”.............................................................. 890  \n3. Custodial Practices of Cryptocurrency Exchanges ... 893  \nC. Cryptocurrency Exchange User Agreements .................. 896  \nII. CRYPTOCURRENCY EXCHANGES IN BANKRUPTCY ....................902  \nA. The Automatic Stay.........................................................902  \nB. Property of the Estate ......................................................903  \n1. Express Trust ............................................................. 906  \n2. Constructive Trust ..................................................... 910  \n3. Financial Assets Governed by UCC Article 8 ........... 911  \n4. Bailment vs. Loan or Sale .......................................... 923  \n5. Other Factors Affecting Property of Estate Treatment ...................................................................929  \n6. Summary .................................................................... 93","cbCaia2zAjU3wmcc","https://ap.wps.com/l/cbCaia2zAjU3wmcc","pdf",1011800,78,"English","# Introduction\n# I. Cryptocurrency Wallets and Exchanges\n## A. Crypto Wallets\n## B. Cryptocurrency Exchanges\n## C. Cryptocurrency Exchange User Agreements\n# II. Cryptocurrency Exchanges in Bankruptcy\n## A. The Automatic Stay\n## B. Property of the Estate\n## C. Preference Actions\n## D. Status of Exchange Customers’ Claims\n# III. The Additional Risks of Staged Wallets\n# IV. Inadequacy of Most Existing Regulatory Regimes\n## A. Market Self-Regulation\n## B. Insurance\n## C. Smart Contracts\n## D. Federal Regulation\n## E. State Money Transmitter Laws\n## F. New York Limited Purpose Trust Companies & Bitlicense\n## G. Wyoming Special Purpose Depository Institutions\n## H. Consumer Financial Protection Bureau Regulation\n# Conclusion","[{\"question\":\"Why do cryptocurrency exchanges pose insolvency and custodial risk to customers?\",\"answer\":\"Exchanges are thinly regulated for safety and soundness and can face insolvency risks from proprietary investments and from hacking. Because they also hold customers’ deposits, failure can disrupt customer access and treatment of holdings.\"},{\"question\":\"How does U.S. law typically protect traditional custodial assets, and why is crypto different?\",\"answer\":\"U.S. law provides substantial protections for custodial holdings of securities, commodities, and cash deposits via securities/commodities brokers or banks. No comparable regime exists for cryptocurrency custodial holdings, so bankruptcy courts may treat them as the exchange’s property.\"},{\"question\":\"What credit-risk problem does the paper highlight in cryptocurrency markets?\",\"answer\":\"It argues that credit risk arises not only from active transacting but also from passive holding, tied to technical bankruptcy and commercial-law details. This can be misunderstood and unpriced by market participants, producing moral hazard as exchanges take rewards while externalizing costs to customers.\"}]","Not Your Keys, Not Your Coins - Unpriced Credit Risk in Cryptocurrency | PDF",197]