Digital Asset Insolvency in the Blockchain Era: A Framework for Bankruptcy Law

Abstract

Background: Blockchain-based assets increasingly operate as investment and commercial property, yet their decentralized architecture, pseudonymous control, volatility, and cross-border transferability challenge conventional bankruptcy mechanisms. Objective: This study examines how digital assets may be treated under insolvency law, identifies legal and operational obstacles to their administration, and develops a Digital Asset Insolvency Framework for Indonesia. Methods: Using normative legal research, the study combines statutory, conceptual, comparative, and case approaches. Indonesia is assessed against developments in the United Kingdom, Singapore, and the United States across property status, disclosure, control, valuation, liquidation, distribution, and institutional capacity. Results: Digital assets may be recognized as property and included in a bankruptcy estate where applicable legal doctrine supports their economic value, transferability, identifiability, and effective control. The analysis nevertheless identifies persistent gaps in wallet disclosure, private-key access, ownership verification, valuation timing, liquidation security, and cross-border recovery. The study's novelty lies in an integrated five-pillar framework linking disclosure-based transparency, access-based control, adaptive valuation, secure liquidation and distribution, and institutional capacity. This framework translates comparative legal developments into operational guidance for Indonesian insolvency governance. Conclusion: A technology-responsive insolvency regime should combine legal recognition with enforceable access, valuation, liquidation, and institutional mechanisms so that digital assets can be administered transparently while protecting creditor equality and asset value.