The Crypto Quandary: Is Bankruptcy Ready?

McDermott, Megan | July 4, 2020

As the United States grapples with how best to manage a global pandemic, bankruptcy courts are bracing for the inevitable fallout from COVID-19. As we saw in the wake of the 2008 financial crisis, hard-hit businesses will need to reorganize to adjust to new conditions, while out-of-work consumers will need debt relief options. But there will be a new twist for this impending wave of bankruptcies: how should bankruptcy courts deal with crypto assets like Bitcoin? This Essay argues that the rise of cryptocurrency investments over the last decade poses serious complications for the next round of consumer and business bankruptcies. Although legislative solutions may be necessary to adequately address these complications, at the very least, greater awareness of these issues will help ensure that courts and stakeholders are better prepared to address this looming crisis.


Lecturer and Honorary Fellow in the Institute for Legal Studies, University of Wisconsin School of Law. Early versions of this paper were presented at the 2019 National Business Law Scholars Conference at University of California, Berkeley School of Law and the Second International Comparative Insolvency Symposium at the University of Miami School of Law. I am grateful to my fellow panelists and attendees for their questions, comments, and suggestions.

Copyright 2020 by Megan McDermott

Cite as: Megan McDermott, The Crypto Quandary: Is Bankruptcy Ready?, 115 Nw. U.L. Rev. Online 24 (2020),