In a report released on Wednesday, the independent body known as the Law Commission proposed the creation of a new category of personal property within UK law to accommodate crypto assets. The Commission highlighted that digital assets like cryptocurrencies and non-fungible tokens (NFTs) do not fit into the traditional classifications of personal property.
To address this, the Commission suggested the addition of a third category called “digital objects” alongside the existing categories of “things in possession” (such as tangible assets like gold) and “things in action” (which include debt or shares in a company). This new category would provide legal recognition and framework for digital assets.
Additionally, the Commission recommended the establishment of a panel of experts to provide guidance to courts on legal matters related to digital assets. These proposed measures align with the UK government’s ambition to position itself as a global hub for crypto assets, as stated by the Law Commission.
Sarah Green, the law commissioner for commercial and common law, emphasized the significance of digital assets in recent years and highlighted that the adaptability of the common law system in England and Wales allows it to respond effectively to the rapid growth of this sector.
The report’s recommendations received positive feedback from industry experts, with Adam Sanitt, knowledge director at Norton Rose Fulbright, expressing reassurance that the Law Commission chose a measured approach. Sanitt believes that implementing these recommendations would offer increased protection for crypto asset holders and contribute to the government’s goal of establishing the UK as a leading tech hub.
Furthermore, the Commission identified a lack of legal certainty surrounding collateral arrangements involving crypto assets and urged the government to develop a specialized legal framework to address this issue. The report emphasized the strong demand for such reforms among industry stakeholders and market participants.
The UK’s Prime Minister at the time, Rishi Sunak, had previously expressed his desire to position Britain as a global hub for crypto asset technology in April 2022. Consequently, he tasked the Law Commission with assessing the adequacy of existing laws in accommodating digital assets.
The Law Commission’s recommendations, if adopted, would provide a regulatory framework that offers greater protection and legal certainty to holders of crypto assets. These steps would further reinforce the UK’s ambitions to become a prominent global destination for the crypto asset industry.
