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  • AutorenbildDom T. Ghazan

What is an Asset?

First off, assets are elements that fulfill their purpose as collateral in the event of bankruptcy, deriving their term-meaning from the French word ‘assez’ which means ‘enough’.[1] Naturally, alleged 800 years have passed since the inception of double-entry bookkeeping, condoning to asset allocation reporting certainty over capturing an undertaking’s capital stock by assessing all business property in a meticulous manner and ascribing to it accurate exchange value.[2] Therefore, the rationale behind the concept, as so often in economics, is risk mitigation by virtue of Austauschbarkeit in the wake of complex markets that excessively hinge on asymmetric information ie trust in individual labor dexterity.[3]



Second off, accounting sub-divides assets into current, deferred and fixed assets. Current ones being cash, bank deposits, short term notes, accrued interest, inventories of goods in process and finished goods with expectation to be sold within the current accounting period; deferred ones are for instance insurance and advertising payments, and fixed ones are such that are of lasting nature like buildings and machines.[4] Corresponding thereto, current liabilities are the ones expected to be paid off within the current accounting period like wage claims, short-term loans, accounts payable, etc.—long term loan obligations correspond to fixed assets in terms of time horizon and pertain to tangibles.[5] It bears noting, that economics is after all concerned with ‘the production and allocation of resources’ and respectively accounting serves the vital purpose of ‘measuring and reporting on the production and allocation of resources’.[6] Making entity-based audited financial reporting, pursuant to commonly acknowledged accounting standards, the keystone of wealth.



Third off, proof of work and pertinent economic feasibility of profit-oriented undertakings manifests as ‘arranged and organized accounting information’ that pays heed to the principle of accountability in terms of conventions to record all transactions with other entities, to allocate debt, and assets.[7] These accounting records are perceived as the foundations of ledger-based accounting and the assignment of assets to proprietary (specialized) ledgers constitutes the very foundation of economic property stricto sensu. Above all, for further elucidations, it is significant to keep in mind that the realm of law transcends the realm of economics at the very margin where property meets asset. Dualistically, both terms epitomize the same chose and only differ in terms of time horizon.[8] Western legal tradition, however, is contingent upon assumption of legitimate title for ownership of assets, a priori underpinned by sovereign conveyance of rights and obligations to possess and act according to one’s (private) property.[9] Furthermore, an entity or individual can never malevolently acquire property in a legally permissible manner by contradicting the premise possessio nec vi nec clam nec precario.



Fourth off, since capital accumulation in the face of assets and protection of the former by invoking respective property rights has transnational implications—as does crypto—the subject matter and scope are best delineated pursuant to sources of international law. Relating thereto, we know of myriad protected property rights and pertinent legislative as well as judiciary acknowledgement of such rights and their protection by the United Nations system and international custom. Above all, the Universal Declaration of Human Rights in Article 17 para 1 in conjunction with para 2 stipulates ‘everyone’s right to own property as well as in association with others’ and prohibits ‘the arbitrary deprivation of such property’.[10] Moreover, the International Covenant on Economic, Social and Cultural Rights pursuant to Article 1 in conjunction with Article 2 confers economic rights, above all to dispose of natural wealth and resources, upon all peoples.[11] Whereas the protection of asset accumulation in terms of economic rights has seen little to no palpable invocation before international courts and tribunals, property rights have a long tradition of legal remedies before international courts and tribunals. Importantly, the linchpin to permissible adjudication is an extensively laid down body of proprietary human rights law that constitutes the legal basis for the protection of property rights from expropriation.[12] Importantly, due to the fragmentation of international law and regional vicissitudes, definitions of the term property have to be deducted from numerous regional legal fiats such as treaties and case law by international courts and tribunals.[13] For instance, in Europe the European Convention on Human Rights in conjunction with Protocol No 1 to the European Convention on Human Rights entitles ‘ever natural and legal person to peaceful enjoyment of their possessions’, enshrined under the right to protection of ownership.[14] Its American homologue, pursuant to Article 21 American Convention on Human Rights, equally entails ‘everyone’s right to the use and enjoyment of their property’.[15] Nevertheless, in terms of the scope of defining property—contrary to the European Court of Human Rights—the Inter-American Court of Human Rights in its case law is more advanced, regarding property in conjunction with Art 21 ACHR as ‘those material things which can be possessed, as well as any right which may be part of a person’s patrimony; that concept includes all movables and immovables, corporal and incorporeal elements and any other intangible object capable of having value.’[16] When juxtaposing both systems with regard to the degree of protection, on the one hand, Europe protects claims by natural and legal person and, on the other hand, the Americas only protect natural persons—however, jurisdiction within the territories of the high contracting parties equally protects all parties respectively without discrimination due to nationality. In conclusion, and additionally enumerating customary international law, following property rights are known by (t)he law and underpin the discussion about cryptographically amalgamated vessels of value that can be possessed transnationally: movable and immovable property;[17] contractual rights and their expropriation;[18] intangible rights, including contractually acquired rights or vested rights;[19] intangible property rights;[20] any right which can be object of a commercial transaction, and any expropriated right that entails a compulsory transfer of property rights;[21] every kind of asset that can be subject to investment, rights endowed with economic value, even judicial and arbitral awards that can be expropriated[22].[23]



Fifth off, subsequently, it follows that tangibility of assets is a trait that needs further elucidation, precisely, if abstract immaterial things can be economically valued and regarded as assets under the law. Dichotomously, things may function as things but can function as wealth at the same time.[24] The former configuration epitomizes its own intrinsic attributes, while the latter constitutes a mere representation in terms of wealth.[25] Relating thereto, it bears noting, that the entire discipline of wealth management hinges on division of entitlements into sequential time slices rather than employing the binary set of basic concepts that are embellished by ownership and possession of things.[26] Complexity pertaining to the matter is mitigated by the concept of fungibility. In a nutshell, it regards things as unique in terms of substitutability in eventu of loss, which is to say that a thing can be replaced to all intents and purposes identically at any time.[27] In conclusion, as the pivot to tangibility and fungibility, physical abnormality and rarity make tangible things acquire value in their own right and give them more than mere face value—however, when used as currency, they become fungibles.


-Dom T. Ghazan


[1] Kenneth E Boulding, ‘Assets and Liabilities’, The New Palgrave Dictionary of Economics (3rd edn, Palgrave Macmillan 2018) 494 ff. Primarily, the legal concept arose from steadfast regulation of financial requirements for undertakings. It pivotally purports the notion whereby assets shall suffice to meet liabilities, vis-à-vis creditors, when going out of business—the former being positive in kind, and the latter being their negative homologue. Thus, giving legal enforcement an accountable means to soundly wind down operations without wreaking havoc among stakeholders, primarily, in case of unforeseen circumstances for the balance sheet’s commander. [2] ibid. [3] ibid. [4] Joel S Demski, ‘Accounting and Economics’, The New Palgrave Dictionary of Economics (3rd edn, Palgrave Macmillan 2018) 23 ff. Asset (in)tangibility will be propounded shortly hereinafter when embarking on the legal dimension of proprietary assets, conclusively, because assignment of choses to a proprietor is inevitable for states to levy taxes from its constituents. [5] ibid. [6] ibid. [7] Basil S Yamey, ‘Double-Entry Bookkeeping’, The New Palgrave Dictionary of Economics (3rd edn, Palgrave Macmillan 2018) 3055. Suffice it to say, that arrangement and organization does not entail notions of scope and content. Double entry merely requires that each transaction or other relevant event is recorded twice, namely, as debt and credit denominated in money. Only by accounting standards do we see obligations to prepare balance sheets, denominated in legal tender, as taxable foundations called net profit and loss. [8] The discipline of economics is based on individual expectations about the future and regulatory coordination to meet those expectations accordingly for reaching temporary general equilibrium in differential wealth distribution cf JM Grandmont, ‘Temporary Equilibrium’, The New Palgrave Dictionary of Economics (3rd edn, Palgrave Macmillan 2018) 13544. [9] It shall be always borne in mind that only by virtue of the social contract’s vexing point—that confers basic rights and obligations upon private elements of law—can property exist and its transparent allocation for common legal and social order be maintained cf Ioannis D Evrigenis, ‘The State of Nature’ in Aloysius Martinich and Kinch Hoekstra (eds), The Oxford Handbook of Hobbes (Oxford University Press 2016) 239. (emphasis added) [10] Universal Declaration of Human Rights (n 1) Article 27. [11] International Covenant on Economic, Social and Cultural Rights (adopted 16 December 1966, entered into force 3 January 1976) 993 UNTS 3 (ICESCR). [12] Ursula Kriebaum and August Reinisch, ‘Property, Right to, International Protection’ in Anne Peters (ed), Max Planck Encyclopedia of Public International Law (Oxford University Press 2019) para 7. [13] ibid. [14] cf Convention for the Protection of Human Rights and Fundamental Freedoms (adopted 4 November 1950, entered into force 3 September 1953) (ECHR) 213 UNTS 221. [15] cf American Convention on Human Rights "Pact of San José, Costa Rica" (adopted 22 November 1969, entered into force 18 July 1978) (ACHR) 1144 UNTS 123. [16] cf Case of the Mayagna (Sumo) Awas Tingni Community v Nicaragua, Mayagna (Sumo) Awas Tingni Community v Nicaragua, Merits, reparations and costs, IACHR Series C No 79, [2001] IACHR 9, IHRL 1462 (IACHR 2001), 31st August 2001, Inter-American Court of Human Rights [IACtHR]. [17] cf Alison Clarke and Paul Kohler, Property Law: Commentary and Materials (CUP 2005). [18] cf Certain German Interests in Polish Upper Silesia (Preliminary Objections), Germany v Poland, Documents relating to Judgment No 6 of 25 August 1925, PCIJ Series C No 9-I, League of Nations (historical) [LoN]; Permanent Court of International Justice (historical) [PCIJ] [19] cf Norwegian Shipowners’ Claims (Norway v USA) (1922) 1 Reports of International Arbitral Awards 307. [20] cf Wena Hotels Limited v Egypt, Decision on the Application by Wena Hotels Ltd for Interpretation of the Award, ICSID Case No ARB/98/4, IIC 275 (2005), 20th October 2005, despatched 31st October 2005, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID]. [21] cf Amoco International Finance Corporation v Iran and ors, Partial award, Case No 56, Award No 310-56-3, (1988) 15 Iran-US CTR 189, (1988) 27 ILM 1314, (1987) 83 ILR 500, 14th July 1987, Iran-United States Claims Tribunal. [22] cf Saipem SpA v Bangladesh, Award, ICSID Case No ARB/05/7, IIC 378 (2009), 20th June 2009, despatched 30th June 2009, United Nations [UN]; World Bank; International Centre for Settlement of Investment Disputes [ICSID]. [23] Succinctly, for instance, permissible legal fiats rendered by competent tribunals under the New York Convention are directly enforceable without municipal acceptance of such awards, therefore, resulting in an unlawful deprivation of property rights if an award is not executed pursuant to its merits cf Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 10th June 1958 (330 UNTS 3, UNTS Reg No I-4739, 21 UST 2517, 4 ILM 532 (1965)), IC-MT 004 (1958), OXIO 601. This unlawful deprivation ipso facto e jure constitutes a property right. [24] Clarke and Kohler (n 223) 50. [25] ibid., at 51. That is to say, that an asset either serves the holder for its own quality’s sake or is simply curated in order to fulfil an investment purpose. [26] ibid., at 52. In fact, the socio-economic relevance of these different lenses climaxes in different persons hold the same things with different interests and claim prevailing entitlement at the same time. [27] ibid., at 53. Money is the archetype of a fungible, since, it can be substituted at any time by a corresponding quantity, ie units, if a note is lost.

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