Shortcomings in the Tracing of Digital Assets in the EU’s Insolvency III Directive

Abstract

This paper examines whether the brand-new EU Directive harmonising certain aspects of insolvency law (Insolvency III) with its Title III on asset tracing is fit for the digital age and whether it offers adequate tools for the tracing of digital assets, such as crypto-assets under the EU Markets in Crypto-assets Regulation (MiCAR). The study will demonstrate that Title III on asset tracing has been outdated since the inception of the Insolvency III as it has a ‘blind spot’ on tracing digital assets.

1. Introduction

After more than three years of negotiations between the European Commission, the European Parliament and the Council, the three European institutions reached a final compromise (Council of the European Union 2025) on a new Directive harmonising certain aspects of insolvency law of 30 March 2026 (European Union 2026), known as the Harmonisation Directive or Insolvency III and published in the Official Journal of the European Union on 1 April 2026.1 Some of the titles originally proposed in the December 2022 draft Directive (European Commission 2022) have been the subject of heated debates between the delegates of the Member States and the representatives of the European Commission for years. Other titles, however, seemed to fly under the radar and were therefore hardly discussed. This is also the case for Title III, which deals with “tracing assets belonging to the insolvency estate”. This title was originally composed of six articles but ended up with seven articles structured into four chapters after the trialogue. These articles are based on ten recitals (19–28). While the institutions comprehensively amended the draft articles compared to the European Commission’s original proposal,2 the changes were not fundamental in terms of the content.

Adopting a doctrinal methodological approach, this paper examines whether the brand-new Insolvency III, with its focus on asset tracing, is fit for the digital age and whether it offers adequate tools for the tracing of digital assets, such as crypto-assets under the Markets in Crypto-assets Regulation (MiCAR (European Union 2023)). The efficacy of the Insolvency III asset tracing provisions is assessed using the UNCITRAL Toolkit and Background Notes on Asset Tracing and Recovery in Insolvency Proceedings (ATR) as a benchmark. For the purpose of this paper ‘asset tracing’, which is not defined in Insolvency III, is understood as the legal process of identifying and locating misappropriated assets or their proceeds that should be subject to the insolvency proceedings (cf. UNCITRAL 2025, p. 1; Moeliker 2023, p. 89). The importance of effective asset tracing in insolvency will be explained and analysed to support the thesis that Insolvency III is insufficient in the context of digital assets. Specifically the paper will argue that, although Insolvency III provides appropriate asset tracing rules for assets held in traditional bank accounts, the seven articles are essentially ill-equipped for assets that are not corporeal, not organised by state courts or administrative authorities as public registrars and not registered or taken into custody by traditional credit institutions, but rather by modern service providers such as crypto-asset service providers (CASPs) under MiCAR.3

Despite these limitations, however, the paper will demonstrate that the asset tracing provisions in Insolvency III can be broadly interpreted using the European legal methodology as it has been established and developed by the Court of Justice of the European Union (CJEU). Due to the reference in Articles 2(1)(e) and 15(2) Insolvency III to the Anti-Money Laundering Directive (AMLD6 (European Union 2024)), access and search rights with regard to crypto-asset accounts can be subsumed under Article 15 Insolvency III. Due to the broad interpretation presented here, which is based on the European legal methodology, and in order to avoid differently effective access and search rights in EU directives on anti-money laundering and asset tracing in insolvency proceedings, national legislators must grant these access and search rights when transposing the Insolvency III. However, the paper will also highlight shortcomings that cannot be resolved through interpretation of the black letter law (de lege lata), but rather require an amendment of the Directive through new legislation (de lege ferenda) that is specifically designed for the tracing of digital assets from the outset.

These shortcomings had already been foreseen and highlighted by the Group of Experts on restructuring and insolvency (GERIL) in their reports of 22 June 2021 and 16 November 2021. In these reports, the experts already pointed out ‘the blind spot’ of the initial versions of the proposed Directive:

“Some experts addressed the difficulties (both technical and legal) with regard to tracing of virtual assets. According to one expert, public keys attached to virtual assets are practically not amenable to IPs. Tracing such assets is not possible without dedicated legislation. Another expert suggested checking the bank accounts of debtor if there is any trace of buying crypto-currencies. If there is evidence for that, then legislator could oblige custodian wallet holders to disclose the private key.”

(GERIL 2021a, p. 3)

“An expert advocates for a more explicit mention in one of the relevant texts of the powers available to IPs, including some consideration of the relevance of asset-tracing mechanisms to digital/crypto assets. There is a legislative gap vis-à-vis the tracing and discovery of virtual assets in insolvency proceedings in the EU. Another expert notes the general problem with intangible assets is that practically they are inaccessible to the IPs, unless you do not [sic] have the private key.”

(GERIL 2021b, p. 6)4

This paper will not only confirm the concerns raised by the experts in 2021 but also explain why the retention of these shortcomings is so difficult to understand. The introduction of MiCAR in 2024 rapidly fostered the growth of the markets in crypto-assets and boosted this digital asset market. Four years after the European Commission presented its proposal for Insolvency III, it is unclear why the seven articles on asset tracing introduced by this brand-new Directive did not include provisions to deal with a debtor’s tokenised digital assets registered on a distributed ledger, such as a blockchain, or in other electronic registers. The paper, therefore, also proposes those amendments to Insolvency III that could be decided on quickly by an amending directive or regulation and thus much sooner than in five years when this newly introduced Directive needs to be reviewed (Article 70 Insolvency III).

2. The Importance of Asset Tracing in Insolvency

To understand the shortcomings of Insolvency III in the context of asset tracing as it relates to digital assets, it is first necessary to understand the importance of asset tracing in insolvency. It has already been explained that asset tracing is understood in this paper as the legal process of identifying and locating misappropriated assets or their proceeds that should be subject to the insolvency proceedings (UNCITRAL 2025, p. 1). Asset tracing matters because it is the objective of an insolvency practitioner administering an insolvent estate to maximise its value in order to maximise returns to creditors. To achieve this objective, insolvency practitioners require the means to identify and locate those assets that belong to the insolvency estate in order to recover them, thus protecting and preserving the insolvency estate (cf. UNCITRAL 2025, p. 15). The importance of providing the insolvency practitioner with the means to identify and locate assets is specifically recognised by the European legislator in Recital 19 of Insolvency III. Nevertheless, the maximisation of the value of the insolvency estate cannot be achieved by a single asset tracing measure, rather, effective asset tracing on insolvency will require the insolvency practitioner to use the range of tools they have at their disposal. The tools necessary for effective asset tracing on insolvency were considered in depth between 2021 and 2025 by UNCITRAL Working Group V (Insolvency Law) and resulted in the publication of the ATR Toolkit (supported by extensive Background Notes), which provides expert guidance for policymakers and legislators (UNCITRAL 2025, p. 1). The UNCITRAL debates considered the work of other supra-national organisations including that of the Hague Conference on Private International Law (HCCH) and that of the International Institute for the Unification of Private Law (UNIDROIT) (UNCITRAL 2025, p. iii). The ATR Toolkit therefore provides a contemporary, cross-national framework against which to assess the Insolvency III asset tracing provisions as they apply to digital assets.

The ATR Toolkit is non-prescriptive and seeks to recommend those actions that will enhance ATR. The ATR Toolkit itself is very short, comprising only three sections. Each section sets out specific objectives, features and conditions, and safeguards for that section. Section I provides a short overview of ATR measures generally. In Section II, the ATR Toolkit identifies key principles of good information sharing and disclosure, as well as asset protection measures and asset recovery measures. In Section III, the focus shifts to those tools that support ATR, namely enforcement and sanctions in ATR, and the necessity of court-to-court cooperation and coordination (UNCITRAL 2025, pp. 15–21). Information and disclosure measures are necessary to understand the extent of the insolvency estate and to understand whether any assets of the insolvency estate are not held by the debtor, or have been passed improperly to third parties. Within the EU, the power of an insolvency practitioner to request and gather information will be the law of the Member State in which the insolvency proceedings are opened (Article 7(1), (2) sentence 2 lit. b, c EIR). Once this information has been gathered, the insolvency practitioner can determine whether it is appropriate to take action to protect the assets and/or move to recover them. Asset protection measures may be required in cases where the insolvency practitioner anticipates that assets could be dissipated or otherwise passed beyond the reach of the insolvency estate; such measures may require urgent and clandestine action (UNCITRAL 2025, pp. 61–63).5 Once the insolvency practitioner is satisfied that any such contested assets have not been removed, asset recovery actions can be implemented. These could include avoidance actions, as envisaged in Title II of Insolvency III, and in some cases, there may be an overlap between insolvency ATR proceedings and criminal ATR proceedings (UNCITRAL 2025, pp. 66 et seq.). Although these three sets of ATR measures translate into three steps that may seem relatively straightforward, there are significant challenges in pursuing both urgent asset protection measures and asset recovery measures in cases where assets may be located across borders, as such cases are likely to require the coordination of proceedings as well as court-to-court cooperation. The ATR Toolkit recognises these challenges and sets out a range of tools to help to facilitate and support cross-border ATR proceedings with the objectives of expediting proceedings and reducing the likelihood of conflicting or inconsistent ATR outcomes (UNCITRAL 2025, p. 21).

The main focus of this paper is on the first measure, namely the role of ATR information and disclosure measures in relation to digital assets, and their specific objectives of obtaining information and evidence about the debtor, its assets and affairs, and identifying and finding out the location of assets of the insolvency estate (UNCITRAL 2025, p. 16). This measure will be critiqued specifically in relation to the grant of access to bank account registers and information under Title III of Insolvency III (see III. 1.). However, the second and third measures, namely asset protection and asset recovery, will also be discussed and critiqued in the context of Insolvency III where they are relevant to digital assets, particularly in the cross-border context. This is because digital assets throw up complex problems of location with the potential for cross-border disputes requiring court-to-court cooperation and coordination.6 These issues are envisaged in Title III, which includes specific provisions to facilitate cross-border access to bank account registers and information. Lastly, some of the wider ATR Toolkit objectives will be considered in relation to Insolvency III where relevant. For example, it is important to acknowledge that providing an insolvency practitioner with access to an individual’s personal data, including confidential financial information, can have damaging consequences for that individual. The UNCITRAL Toolkit objectives include an objective to promote the rule of law and good governance based on the premise that “ATR should not be achieved at the expense of other considerations, such as due process and the protection of legitimate interests of persons affected by ATR” (UNCITRAL 2025, pp. 13, 15).

The next part of this paper will consider the detail of the Title III provisions, inevitably beginning with a largely descriptive account of each article, before moving on to analyse them in V.

3. Scope and Content of Title III of the Insolvency III

Before interpreting Title III of the Directive and recitals and highlighting shortcomings of the articles on asset tracing, the scope and content of the seven articles and the accompanying recitals need to be outlined first. This section, however, does not only describe the text of the provisions but illustrates what is missing from the respective articles, though needed for tracing all types of digital assets.

3.1. Chapter 1 and Its Focus on ‘Bank Account Information’

Chapter 1 in Title III is about the access by designated courts and administrative authorities to ‘bank account information’ as defined in Article 2(1)(e) Insolvency III. Its core article is Article 14 on the “Designated courts and administrative authorities”. According to Article 14(1) each Member State shall designate the courts or administrative authorities that are authorised to access and search its national bank account registers and those authorised to access and search cross-border according to Article 15(2) Insolvency III. Article 14(2) Insolvency III stipulates notification obligations of the Member States vis-à-vis the European Commission and the publication of the courts and authorities in the Official Journal of the European Union. It seems at first glance that the title’s core provision focusses primarily on traditional bank accounts and less on service providers in the digital markets, especially not in the crypto markets.

In line with this primary focus on banks, Article 15(1) requires the Member States to ensure that the designated courts or administrative authorities have the power to access and search, directly and immediately, bank account information where two conditions are met, namely the insolvency practitioner (as defined in Article 2(1)(a) Insolvency III) appointed in ongoing insolvency proceedings, including interim proceedings, requests bank account information, and the bank account information is necessary for the purposes of identifying and tracing assets belonging to the insolvency estate in those proceedings, as well as assets subject to avoidance actions.7 The same mechanism applies to cross-border cases which are governed in Article 15(2). In this paragraph the legislator of the European Union refers to bank account information that is available through the bank account registers interconnection system—abridged as BARIS—which is subject to AMLD6 and which specifies the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. Since BARIS is still under construction, Article 15 Insolvency III—as well as other articles of the Directive that relate to BARIS—received a long transposition period until 2029 (Article 55(1) Insolvency III). Article 15(3) Insolvency III limits the information that can be accessed and Article 15(4) seeks to ensure that the conditions to providing access are actually met through verification by the designated courts or administrative authorities. Article 15(5) and (6) therefore focus on the protection of personal data and the appropriate management of confidential information.

Though not clearly stated in Article 15 Insolvency III, the accounts mentioned in the article do not necessarily belong to the debtor but can also be registered to the benefit of third parties as it is the purpose of asset tracing to also disclose assets allocated to accounts registered to third parties (cf. Recital 21 sentence 3 Insolvency III).8

Article 16(1) continues the rationale of Article 15(3)–(4) and sets as another condition for access the principle of a case-by-case access. Article 16(2) sets conditions for the staff of the designated courts or administrative authorities to maintain high standards of confidentiality and data protection.

Article 17 sets rules for monitoring access to and searches of bank account information by designated courts and administrative authorities by requiring logs that need to be kept for each time such when an access is requested or a search is done. Here again, the conditions for the logs are comparatively comprehensive and reflect the legislator’s concern that information might be accessed or searched too easily, too often and without the required element of necessity (also compare Recitals 22, 24 and 25 Insolvency III that all stress the objective of protecting personal data at the same time when tracing assets). Although it is beyond the scope of this paper to address the data protection aspects of this legislation, these safeguards are vital to the success of Insolvency III. It is essential that the party being investigated is protected from the consequences of interference in their affairs by the Member State, as the individual concerned will be unaware that their personal records are being viewed by state officials. There is a risk that negligent or fraudulent activity during the process of the search could result in their property being stolen or their personal confidential information made public. The emphasis on safeguards to protect the confidentiality of data is therefore essential to ensuring the legitimacy of any searches undertaken under Insolvency III and reflects the ART Toolkit Objective of ensuring good governance and the need to uphold the rule of law.

In all these articles of Chapter 1, the focus mainly lies on bank accounts in the traditional sense. The reference to AMLD6 makes clear how the representatives of the European Commission were thinking when developing the new provisions: asset tracing shall be permitted vis-à-vis banks in the traditional sense. It seems that digital assets were not on the radar.

3.2. Chapters 2–4 and Their Focus on Traditional Registers and Databases

While Chapter 1 addresses the matter of the designated courts and administrative authorities, Chapter 2 focusses on access by insolvency practitioners and, additionally, access to a specific kind of information, namely ‘beneficial ownership information’.

According to Article 18 Member States shall ensure that, for the purposes of identifying and tracing assets relevant for the insolvency proceedings for which they are appointed, insolvency practitioners have timely access to information relating to the beneficial owners of both legal entities and legal arrangements that are held in interconnected central beneficial ownership registers. In conjunction with Articles 15–17, this provision reflects the critical principles of successful asset tracing and recovery, namely, that any actions are swift, and conducted in such a way that those holding or controlling the assets are not alerted to any enquiries that may enable them to conceal assets beyond the reach of the court or an insolvency practitioner. The confidentiality of the information sharing process means that the entity, those involved with any legal arrangements, and the beneficial owner are all unaware that any information has been shared. This approach aligns to the ATR Toolkit and guidance, which seeks to balance the urgent provision of information to insolvency practitioners with the need to ensure due process and the legitimacy of proceedings (UNCITRAL 2025, pp. 13, 16).

Chapter 3 also focusses on access by insolvency practitioners and, this time, access to national registers and databases. According the Article 19, Member States shall ensure that insolvency practitioners, regardless of the Member State in which they have been appointed, have direct and expeditious access to information necessary of the purposes of identifying and tracing assets belonging to the insolvency estate, as well as assets subject to avoidance actions, that are held in existing national registers and databases listed in the Annex of the Insolvency III and in accordance with conditions provided for by national law.

Article 19 is certainly the broadest legal power as it is the only provision that establishes a right of access to national registers and databases whenever this right is necessary for the purposes named in the article. However, the broad legal power is promptly restricted as the right to access is limited to existing national registers and databases listed in the Annex. This reference and the Annex seem to be final and exhaustive, which is why a register or database not listed in the Annex cannot be accessed by the insolvency practitioner based on Article 19(1).9 Furthermore, limiting conditions may be provided by national law as the last half-sentence of Article 19(1) refers to national law. Article 19(2), in essence, empowers insolvency practitioners appointed in another Member State to exercise the same right to access as set out in Article 19(1) so that insolvency practitioners can exercise their rights to access on a level playing field (cf. Recital 27 Insolvency III Directive; rightly already (Moeliker 2023, p. 96)).10

In any case, the traditional thinking behind Article 19 can be seen from the Annex as the registers and databases listed there are of a traditional nature. This is obvious for cadastral and land registers, registers for vehicles, ships and aircrafts, registers or databases containing information on the ownership of securities, and registers of intellectual property rights including patent and trademark rights. These registers were all in place long before registers for DLT-based digital assets were developed.

Lastly and similarly to Article 19(2), which merely sets a level playing field between the appointed insolvency practitioners, Chapter 4 with its single provision Article 20 requires Member States to ensure that insolvency practitioners appointed in another Member State are not subject to conditions that are less favourable than those applicable to the insolvency practitioners appointed in that Member State. This provision can also be seen to align with the ATR Toolkit objective of limiting the likelihood of inconsistent ATR outcomes (UNCITRAL 2025, p. 20).

3.3. Interim Conclusion: Digital Assets Largely Overlooked

All seven articles and ten recitals are predominantly designed for asset tracing in the non-digital age: they focus on traditional bank account information and do not reflect the peculiarities of digital assets, even though they could, as CERIL has noted, be considered to be held on a public register where, for example, they are held under the control of a crypto-custodian.11

Yet not a single provision of the Insolvency III explicitly names digital assets, nor refers to crypto-assets under MiCAR. A specific right to access regarding beneficial ownership information makes sense and is in line with the core principles of AMLD6, but this right in Article 18 Insolvency III has not been designed for the tracing of digital assets. This problem could be overcome if Insolvency III included a general provision that could capture digital assets. Although at first glance the broader right of access to national registers and databases set out in Article 19 looks suitable for tracing digital assets, this is not in fact the case: the right to access national registers and databases is set out in Article 19 and limited by the final and exhaustive reference to the Insolvency III Annex which lists traditional registers and databases, mainly established for corporeal assets such as lands and cars. None of these registers and databases relate to digital assets, clearly demonstrating that the Union legislator has insufficiently appreciated the experts’ concerns as raised in 2021. As a result, insolvency practitioners, for example, cannot access interconnected digital registers to which all registrars of electronic registers provide information on whether they are administering the register for the benefit of the debtor. Hence, Title III on asset tracing has a ‘blind spot’ for digital assets (cf. (Moeliker 2023, p. 98) with a similar conclusion on the base of the original proposal by the European Commission).

4. Digital Assets and the Challenges of Tracing Them

Digital assets contain core features that differ from traditional assets which often pose a challenge in tracing and realising them. Typically, digital assets are intangible data sets, stored on digital registers such as a blockchain and exclusively assigned to a specific person. Furthermore, digital assets are transferable and not replicable (Dilek et al. 2025, p. 720). A crypto-asset according to Article 3(1)(5) MiCAR fulfils these core features. Such an asset means a digital representation of a value or of a right that is able to be transferred and stored electronically using distributed ledger technology or similar technology. ‘Distributed ledger technology’ or ‘DLT’, on the other hand, means a technology that enables the operation and use of distributed ledgers (Article 3(1)(1) MiCAR), whereas ‘distributed ledger’ means an information repository that keeps records of transactions and that is shared across, and synchronised between, a set of DLT network nodes using a consensus mechanism (Article 3(1)(2) MiCAR). Crypto-assets under MiCAR, therefore, serve as a major example of digital assets as they are intangible data sets, stored on a digital register, transferable and exclusively assigned to a specific person.

The mere fact that digital assets lack any situs and—as decentralised assets—cannot be allocated to a specific locus makes many traditional methods of asset tracing useless. In addition, the registers or databases are often not administered by courts or administrative authorities but by the network participants, by nodes for instance, or by other private unknown persons. If the tracing of the digital asset itself, therefore, often turns out to be impossible, asset tracing might focus more on the key players in the digital markets. Here again, the markets in crypto-assets serve as an example. Key actors in the crypto markets are issuers of crypto-assets and crypto-asset service providers (CASPs). ‘Issuer’ under the MiCAR means a natural or legal person, or other undertaking, who issues crypto-assets (Article 3(1)(10) MiCAR). ‘CASP’ means a legal person or other undertaking whose occupation or business is the provision of one or more crypto-asset services to clients on a professional basis, and that is allowed to provide crypto-asset services in accordance with the MiCAR (Article 3(1)(15) MiCAR). The custody of crypto-assets on behalf of clients (Article 3(1)(16)(a) MiCAR) is one of the most important CASP services as digital assets are controlled by custodians most of the time (CERIL 2023, p. 12).

Having completed this review of the articles, it is now necessary to consider how effective the asset tracing provisions of Insolvency III are likely to be for an insolvency practitioner seeking to trace digital assets. To the extent that those assets are held in (traditional) bank accounts, there is a clear process which allows the insolvency practitioner to request access to bank account information from the designated court or administrative authority which the court or administrative authority can provide, subject to certain safeguards (cf. Article 15 Insolvency III). Moreover, the designated court or administrative authority has the power to directly access bank account information held in another Member State (Article 15(2) Insolvency III). As this is a minimum harmonisation instrument, all Member States will need to bring this process into effect. Overall, Insolvency III outlines an efficient process, which specifically strives to overcome delays in coordination and cooperation at an EU cross-border level and so allow timely access to key information. This legal framework should, in practice, assist asset protection and recovery. All of this aligns with the ATR Toolkit Objectives.

However, it is not explicit that the insolvency practitioner has the same right of access to records relating to the debtor’s digital assets, for example, in the form of crypto-assets, where these are not held by a traditional bank. Any powers of investigation and discovery in respect to crypto-assets held by CASPs will be dependent upon the standard investigation approaches available under the applicable law and will not benefit from the swift process and premeditated arrangements in place for bank account information. The disadvantage of this is that, since digital assets can be moved across digital platforms in a matter of seconds, digital assets belonging the insolvency estate may be quickly dissipated or hidden.

As with all EU legislation, Insolvency III only addresses Member States, so although the cross-border information sharing arrangements will be beneficial within the EU, they will not apply to third countries.

Finally, there are other, non-legal issues that must be acknowledged in any consideration of the efficiency or otherwise of Title III, although these are beyond the scope of this paper. The most pressing issue is that the Insolvency III pre-supposes the existence of BARIS, which has not yet been implemented.

5. Interpretation of Articles 14–20 Insolvency III in Light of Digital Assets

A blind spot—at least at first glance—of the Directive’s articles on asset tracing regarding digital assets could be mitigated to future-proof the provisions if the articles could be interpreted in a sense that allows designated courts, administrative authorities and insolvency practitioners to access electronic registers and electronic databases in which digital assets are stored and assigned to the debtor. Practically speaking, for example, Articles 14–20 Insolvency III, therefore, must allow for an interpretation according to which the designated courts, administrative authorities and ideally insolvency practitioners could require an issuer or CASP or other registrar under the MiCAR to give information about crypto-assets held in custody for the debtor or about claims the debtor can pursue against the issuer deriving from asset-referenced tokens (Article 3(1)(6) MiCAR) or electronic money tokens (Article 3(1)(7) MiCAR).

5.1. Methodology

The interpretation of Articles 14–20 Insolvency III needs to be based on the European legal methodology as applied by the Court of Justice of the European Union when deciding on Union law. Therefore, the interpretation of Articles 14–20 Insolvency III will commence with a textual or grammatical interpretation, starting with the wording of the 24 equally ranked language versions of the Directive.12 Furthermore, Articles 14–20 Insolvency III need to be systematically compared to other provisions and recitals in the Directive or other Union law.13 Under the historical interpretation of Articles 14–20 Insolvency III, the evolution of the provisions needs to be reviewed. This interpretation will be followed by the teleological interpretation of Articles 14–20 Insolvency III, examining the telos of the provisions, especially by using the Directive’s recitals and applying the principle of effet utile as it was often applied by the CJEU. Though some Member States already had provisions on asset tracing granting similar legal powers to courts, authorities and insolvency practitioners (cf. sections 97 et seqq. from the German Insolvency Code), Articles 14–20 Insolvency III need to be interpreted autonomously and not by referring to national law.

5.2. Wording of Articles 14–20 Insolvency III

When interpreting the wording of Articles 14–20 Insolvency III, the following observations can be made:

First, none of the articles discussed name digital assets or reference non-corporeal assets in an abstract manner or specify crypto-assets in their text. There is no term in the articles that allows for the understanding that the legislator of the EU wanted to cover digital assets. No other article or recital in the Directive names digital assets or specifically crypto-assets. Ultimately, neither the term ‘bank account information’ as defined in Article 2(1)(e) Insolvency III nor the Directive’s Annex mention digital assets in their definition or Annex. Therefore, if Member States transpose Articles 14–20 Insolvency III literally, insolvency practitioners cannot have access to and search digital registers by referencing the wording of a provision.

Second, none of the articles mentioned refer to MiCAR or the Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (MiFID II) which covers financial instruments that are based on the distributed ledger technology (Article 4(1)(15) MiFID II) and which are, therefore, another important category of digital assets. Besides Title III, this is also the case for the entire Insolvency III which has not a single link to the MiCAR or MiFID II.

Third, none of the articles granting designated courts, administrative authorities or insolvency practitioners legal powers to access information contain a general clause such as ‘similar assets’ under which digital assets might be subsumed.

Fourth, the expression ‘bank’ as used in Title III Insolvency III seems to cover credit institutions but not necessarily financial institutions and likely not other legal entities such as those mentioned in Article 59(1)(a) MiCAR, for instance. However, financial institutions are often engaged in services around digital assets.

An interpretation based on the wording thus does not allow for an understanding that the access and search rights according to Title III cover digital assets in general. Although the Court of Justice of the European Union does not normally apply textual or grammatical interpretation alone, but uses other methods of interpretation, any interpretation in favour of digital assets is difficult from the outset if the wording of Title III does not cover digital assets in at least one of the provisions.

It is worth noting here that, like Insolvency III, the ATR Toolkit does not use or define the term crypto-assets. This lack of specificity in the ATR Toolkit is unsurprising.14 The strength of the ATR Toolkit is that it is seeking to provide principles of general application to enhance recoveries for an insolvency estate in whichever jurisdiction insolvency proceedings are opened; UNCITRAL has not created a model law. However, unlike Insolvency III and its recitals, the technologically neutral term “digital assets” is used, both in the introductory remarks to the ATR Toolkit and in the Background Notes. The Background Notes acknowledge that digital assets may throw up distinct issues in the context of asset tracing. This is important because the term digital assets is sufficiently wide to encompass the sub-set of digital assets that is crypto-assets (UNCITRAL 2025, pp. 36, 72). Specifically, the Background Notes recommend that asset tracing and recovery should take into account:

“legal frameworks and guidance […] applicable to certain assets, for example […] assets held with an intermediary (such as securities or digital assets), which may contain rules on segregation of clients’ assets from those of an intermediary and treatment of assets in insolvency either of a client or an intermediary […]”.

(UNCITRAL 2025, p. 72)

In the context of Insolvency III, the legal framework applicable to crypto-assets held with an intermediary is MiCAR.15 MiCAR has specific provisions relating to the segregation of clients’ assets from those of an intermediary and these provisions specifically reference insolvency. As noted above, CERIL has previously observed that crypto-assets could be considered to be held on a public register where, for example, they are held under the control of a crypto-custodian. It is therefore surprising that MiCAR is not mentioned in the Insolvency III asset tracing provisions, despite the UNCITRAL recommendation to take local frameworks and guidance into account.

The next section will consider whether, despite the shortcomings identified in the wording, Insolvency III can be interpreted to overcome this problem of the gap in access and search rights, allowing the same principles of swift access to account information to be applied to digital assets administered by a registrar within an EU Member State.

5.3. Systematic Interpretation of Article 15(1) Insolvency III

One of the articles of Title III allows for a systematic interpretation, as does Article 15, since this article is intertwined with AMLD6. Article 15(1) Insolvency III requires the Member States to grant legal powers to designated courts or administrative authorities to access and search ‘bank account information’. The term ‘bank account information’ is defined in Article 2(1)(e) Insolvency III as “information listed in Article 16(3) of Directive (EU) 2024/1640”. Article 16(3) AMLD6 lists information that shall be accessible and searchable through the centralised automated mechanisms. Letter (f) lists ‘crypto-asset accounts’ and mentions as part of the information the “unique identifier of the account and the dates of account opening and closing”.

Whereas the Insolvency III reveals a ‘blind spot’ for digital assets, the reference to Article 16(3) AMLD6 in Articles 15(2), 2(1)(e) Insolvency III can be understood as the legislator’s will to access and search at least those accounts that have been established for crypto-assets. This understanding does not overstress the term ‘crypto-asset accounts’, since crypto-asset accounts became a major topic in the AMLD6 and are, consequently, mentioned no less than 25 times in the AMLD6 (see only Recitals 57 et seqq.). Even crypto-asset service providers are expressly mentioned in the AMLD6 (Recital 96, Article 38(1)(c)).16

Since the definition of bank account information with its reference to the AMLD6 (adopted in 2024) was added in the middle of the development of the Insolvency III it seems not too far-fetched that the EC wanted to honour the concerns raised twice by GERIL by broadening the scope of Title III during the trialogue through a reference to a comprehensive catalogue in Article 16(3) AMLD6. Even so, it needs to be stressed that the reference cannot be understood as a right to access and search all electronic registers for digital assets. However, at least crypto-asset accounts cover a major category of digital assets.

5.4. Historic Interpretation of Article 15(1) Insolvency III

Significant developments in the legislative procedure regarding Article 15 Insolvency III allow for a historic interpretation of this article. In the European Commission’s proposal, Article 15(1) Insolvency III referred to the older Article 32a(3) of Directive (EU) 2015/849 and, therefore, the former AMLD. Article 32a(3) AMLD is the predecessor of Article 16(3) AMLD6. Article 32a(3) AMLD did not cover information on crypto-asset accounts whereas the newly amended AMLD6 mentions crypto-assets more than 25 times. This means that the replacement of the reference in Article 15(1) Insolvency III to Article 16(3) AMLD6 could be understood in such a way that the legislator of the EU also wanted to access and search crypto-asset related accounts. Conversely, one could also argue that the Union legislator simply wanted to update the reference to the most recent AMLD and that the inclusion of crypto-asset accounts was coincidental.

Notwithstanding an interpretation in the first sense, the same caveat must be made: the updated reference in the final Insolvency III cannot be understood as a right to access and search all electronic registers for digital assets.

5.5. Teleological Interpretation of Article 15(1) Insolvency III

When examining the rationale of a European provision the underlying recitals of the Union act come into play. Recital 19 sentence 1, Recital 21 sentence 1 and Recital 23 sentence 2 Insolvency III describe the purpose and rationale of the provisions on asset tracing with the goal to maximise the value of the insolvency estate. Interpreting Article 15 Insolvency III in a way that the reference to Article 16(3) AMLD6 should allow the insolvency practitioner to also request access to crypto-asset accounts is, therefore, in line with the goal of maximising the value of the insolvency estate.

Recital 20 explains the purpose of the provisions on asset tracing in a way that access is necessary to “databases which are not publicly accessible”. This is the case for many electronic registers and databases that are run by private service providers. For example, a crypto custodian does not publicly disclose which clients it holds assets for, nor the type and amount of crypto-assets it holds in custody.17 Granting insolvency practitioners the right to access and search those privately conducted databases would enable them to trace digital assets and maximise the value of the insolvency estate.

Therefore, interpreting Article 15(1) Insolvency III broadly, with the aim of maximising the value of the insolvency estate by accessing and searching electronic registers, is consistent with the rationale of Title III of the Insolvency III, as set out in the recitals.18

5.6. Interim Conclusion: (Only) Crypto-Asset Accounts Can Be Accessed and Searched

Despite the wording of Articles 14–20 Insolvency III, which does not mention digital assets at all and particularly not crypto-assets, the systematic, historic and teleological interpretation suggest that designated courts or administrative authorities have the right to access and search crypto-asset accounts and that insolvency practitioners can request this. This can be based on the term ‘bank account information’ as used in Article 15(1) Insolvency III and as defined in Article 2(1)(e) Insolvency III with its reference to Article 16(3) AMLD6, as well as on the historic development of the AML directives with its expansion to include crypto-assets and finally based on Recitals 19 sentence 1, 20, 21 sentence 1 and 23 sentence 2 Insolvency III, since the broad interpretation presented here coincides with the purpose of Title III as described in these recitals.

Despite this partially promising interim conclusion, neither the wording, the systematics, the history nor the rationale of Title III allow for a right to request access and search in all electronic registers. This is why Title III is currently not future-proof for digital assets but highly focussed on traditional assets. Only crypto-assets, still a major category of digital assets, are covered, and then only if one follows the broad interpretation as presented here.

6. Proposals for Transposing and Amending Article 15 Insolvency III

There are at least two options for dealing with the Directive’s shortcomings in the tracing of digital assets: a more comprehensive transposition of Article 15 Insolvency III as the provision granting legal powers to the designated courts or administrative authorities into national law (under 1) or an amendment of the mentioned article by another directive or regulation by the Union legislator (under 2).

6.1. Opportunities and Weaknesses of a Solution in the Transposition Acts

Since the Insolvency III only aims at a minimum harmonisation (Kern 2023, p. 60; implicitly also Thole 2023, p. 392), which has been stated for Title III in particular (Article 4(3) Insolvency III) and which has also been explicitly stated in one of the recitals on asset tracing (Recital 22 sentence 6 Insolvency III), the Member States can transpose Articles 15 Insolvency III Directive to a broader extent. A national transposition act could, for example, additionally allow the designated courts or administrative authorities to access and search “electronic registers on digital assets”. Therefore, the transposing provision for Article 15 Insolvency III could refer firstly to the information as set out in Article 16(3) AMLD6 but it could also include:

“information in electronic registers of digital assets”.

In order to intertwine the national legal power on accessing and searching in electronic registers, the national transposition law could refer to MiCAR and MiFID II to explicitly include electronic registers of ESMA (cf. Article 109 MiCAR) and CASPs (cf. Article 75(2) MiCAR) under the MiCAR organisation. The advantage of naming “electronic registers on digital assets” as the main category and electronic registers under MiCAR and MiFID II as a non-exhaustive subcategory is that the national provision is future-proof and flexible for digital assets that are not based on DLT and blockchain technology. Including the reference, the transposing provision, which grants insolvency courts the power instead of administrative authorities, could read for instance:

“The court opening insolvency proceedings has the power to access and search, directly and immediately, bank account information according to Article 16(3) of Directive (EU) 2024/1640 of the European Parliament and of the Council of 31 May 2024 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, including information in electronic registers on digital assets, in particular registers according to the Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets and Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.”

When transposing the Insolvency III, Articles 18 and 19 seem to be less appropriate for a broader transposition since neither the beneficial ownership registers (Article 18) nor the national registers and databases (Article 19) are comparable to electronic registers of digital assets such as registers organised by a CASP for its clients. The latter is organised by private service providers, whereas the registers mentioned in Articles 18 and 19 Insolvency III are typically conducted by public authorities.

The downside of a national provision permitting the designated courts or administrative authorities to access and search in electronic registers of digital assets is that it is not guaranteed that the designated courts or administrative authorities could access and search electronic registers of digital assets organised in another Member State within the territory of this other Member State within its territory if insolvency proceedings were not opened. It could be that the registrar being requested—which will be, for instance, a private natural or legal person or a partnership—will not follow the required access and search by a foreign court or administrative authority. Furthermore, a single national legislator cannot expand the idea of a single access point to all European electronic registers of digital assets.

Certainly, the right of the insolvency practitioner to request bank account information before the designated courts or administrative authorities (Article 15(1)(a) Insolvency III) in the Member State within the territory of which insolvency proceedings are opened is a power conferred by the law of the Member State of the opening of insolvency proceedings according to Article 21(1) EIR. However, a right to request access and searches pursuant to the lex fori concursus cannot be exercised successfully in another Member State if this Member State did not grant the legal power to access and search in electronic registers of digital assets to its designated courts or administrative authorities.

Hence, the solution of transposing Article 15 Insolvency III would allow a swift improvement in the shortcomings of the Directive in tracing of digital assets; however, it is likely that this right is limited to the Member State of the opening of insolvency proceedings and even Article 21(1) EIR could not resolve the problem that not all Member States will allow their designated courts or administrative authorities to access and search electronic registers on digital assets as this transposition would exceed the minimum harmonisation required.

6.2. Opportunities and Advantages of an Amendment of the Directive

An amendment of Article 15 Insolvency III would harmonise the access and searches in respect to electronic registers of digital assets and avoid a patchwork among the Member States. Article 15(1) Insolvency III should therefore be amended as follows:

“¹Member States shall ensure that the designated courts or administrative authorities have the power to access and search, directly and immediately, bank account information where two conditions are met: (a) the insolvency practitioner appointed in ongoing insolvency proceedings, including interim proceedings, requests bank account information; and (b) the bank account information is necessary for the purposes of identifying and tracing assets belonging to the insolvency estate in those proceedings, as well as assets subject to avoidance actions. ²The same applies to electronic registers of digital assets, in particular registers according to the Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets and Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.”

This solution should be combined with the idea of a single access point according to the AMLD6. Electronic registers of digital assets, therefore, shall be accessible via a single access point and via electronic means. For this, registrars of electronic registers such as a CASP with registers in the sense of Article 75(2) MiCAR should be listed in order to allow the designated courts or administrative authorities to access and search these registers via a single access point.19

7. Conclusions

With the exception of the shortcomings raised in this paper, Insolvency III can be said to have introduced a series of asset tracing provisions likely to be effective in practice. These provisions allow swift action to be taken by an insolvency practitioner seeking to obtain bank account information, beneficial ownership information, national registers and databases, even if administered in another Member State. Such requests are implemented by the designated courts or administrative authorities, with proper safeguards in place to protect those who are being investigated, aligning with best practice. Nevertheless, despite warnings from experts and scholars, Title III on asset tracing has been outdated since the inception of the Insolvency III as it has a ‘blind spot’ on tracing digital assets. This conclusion is reinforced by the ATR Toolkit. Although this document and the Background Notes that support it have the status of non-prescriptive guidance, they nevertheless draw on global best practice in seeking to provide “tools that enable and facilitate the urgent deployment of ATR measures”. Having indicated that asset tracing and recovery should take into account the legal frameworks and guidance applying to specific assets, such as digital assets, the fact that Insolvency III does not at least refer to MiCAR appears to be a missed opportunity. Only a broad systematic, historic and teleological interpretation of Article 15(1) Insolvency III can help in order for the legal power of designated courts or administrative authorities to cover at least access and searches to crypto-asset accounts. Such an approach would, as a minimum, achieve the ATR Toolkit objective of avoiding inconsistent ATR outcomes. However, the entire Title III is ill-equipped for digital assets in a broader sense and, therefore, not technologically neutral and future-proof.

The short-term solution—permitted pursuant to Article 4(3) Insolvency III—is a broader transposition of Article 15(1) Insolvency III into national law by granting designated courts or administrative authorities access and search rights with respect to electronic registers of digital assets, in particular registers under the MiCAR and MiFID II, even if organised by private registrars. However, a solution that prevents a European patchwork and harmonises asset tracing in a digital age is the amendment of Title III in respect of electronic registers of digital assets as soon as possible, including the development of a single access point for those registers.