On Wednesday, the independent Law Commission suggested UK law might accommodate cryptocurrencies by creating a new personal property category for digital assets.
In a government-commissioned report, the Law Commission reported that cryptocurrencies and non-fungible tokens (NFTs) are not personal property.
As expected, the Commission suggested adding a third category of “digital objects” to the existing categories of personal property, which are “things in possession” (physical assets like gold) and “things in action” (debt or corporate shares).
The group also suggested that a government panel of specialists advise courts on the challenges of digital asset law.
The Law Commission said these measures would help the UK government become a global crypto-asset center.
“The use and importance of digital assets has grown significantly in the last few years,” said commercial and common law commissioner Sarah Green.
“The flexibility of the common law means that the legal system in England and Wales is well placed to adapt to this rapid growth.”
In April 2022, Prime Minister Rishi Sunak declared he wanted to make Britain a crypto asset center. He urged the Law Commission to assess digital asset legislation.
These proposals are scalpel-based, not sledgehammer-based. “This will reassure many in the industry,” said Adam Sanitt, knowledge director at Norton Rose Fulbright, which contributed to the paper.
Sanitt said the suggestions would protect crypto asset holders and help the UK become a tech center.
Due to legal uncertainty, the Commission also advised the government to create a custom legal framework for crypto asset collateral agreements.
“There is a very high degree of demand for such law reform among consultees, markets participants and industry bodies,” the research concluded.
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