UK law may be able to accommodate crypto-assets by introducing a new category of personal property that may include digital assets, independent body the Law Commission stated on Wednesday (June 28, 2023).
In a ne report that has been commissioned by the government, the Law Commission stated that virtual assets like cryptocurrencies as well as non-fungible tokens (NFTs) don’t fit within the more conventional classifications of personal property.
As reported by Reuters, the Commission had suggested including another third category of “digital objects” to the current categories of personal property, which are “things in possession” (tangible assets and/or commodities such as the gold bullion) and “things in action” (for instance, debt or shares in a firm).
The group also mentioned the government may appoint a panel of industry professionals in order to give advice to courts regarding legal matters related to digital assets.
These moves could assist the UK government’s goal of serving as an international hub for crypto-assets, the Law Commission noted.
Sarah Green, law commissioner for commercial and common law, said:
“The use and importance of digital assets has grown significantly in the last few years. The flexibility of the common law means that the legal system in England and Wales is well placed to adapt to this rapid growth.”
PM Rishi Sunak stated back in April of last year, when he was the UK’s finance minister, that he was interested in making the nation an international hub for crypto-focused tech.
He had requested the UK Law Commission to assess whether the present legal framework may be able to apply to digital assets.
Adam Sanitt, knowledge director at Norton Rose Fulbright, which made contribution to the report:
“The Law Commission has opted to wield the scalpel, not the sledgehammer, with these recommendations. This will be reassuring for many in the industry.”
Sanitt added that moving forward the suggestions may lead to additional protection for crypto asset holders while supporting the government’s goal to make the UK a thriving global technology center.
The Commission pointed out that there wasn’t adequate legal certainty regarding collateral arrangements that involve digital assets and suggested that the UK government establish an innovative legal framework in order to address these types of requirements.
The report added:
“There is a very high degree of demand for such law reform among consultees, markets participants and industry bodies.”