A recent bill introduced in the UK Parliament has classified digital assets such as cryptocurrencies, NFTs, and carbon credits as personal property under the law.
This legislation addresses a gap in the current framework, where digital assets were not explicitly included under property law in England and Wales. Previously, asset owners faced legal uncertainty if their digital holdings were compromised.
The bill will provide legal protections to individuals and companies against fraud and scams, as well as guide courts in handling complex cases involving digital assets. These issues may arise in a range of scenarios, such as disputes over ownership or asset division in divorce settlements.
The new law is seen as a step towards positioning the UK as an important player in the evolving global digital asset space. By formally recognising these assets, the UK aims to maintain its status among the first countries to integrate digital assets into its legal framework.
Currently there are two categories of property, namely ‘things in possession’ (gold, money, cars) and ‘things in action’ (debts, shares). This Bill introduces a third category to allow for certain digital assets to attract personal property rights.
The action being taken on digital assets is in response to the Law Commission’s report in 2023. The MOJ commissioned the report to identify any barriers to the recognition of digital assets as property under English and Welsh private law and to recommend solutions.
Justice Minister Heidi Alexander emphasised the importance of the legislation, noting that it allows the UK’s legal system to stay relevant in the face of technological advancements. She also highlighted that this move would help attract business and investment to the legal services industry, which is already a significant contributor to the economy.
The UK legal sector currently governs an estimated GBP 250 billion in global mergers and acquisitions and handles 40% of global corporate arbitrations. Ensuring that laws stay up to date is considered crucial for maintaining the UK's reputation as a preferred legal jurisdiction.
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