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The Law Commission, an independent body in the UK, has recommended the creation of a new category of personal property under UK law to accommodate crypto assets, according to a report released on Wednesday.
In the report commissioned by the government, the Law Commission highlighted that digital assets like cryptocurrencies and non-fungible tokens (NFTs) do not fit into the traditional categories of personal property. To address this, the Commission proposed the addition of a third category called “digital objects” alongside the existing categories of “things in possession” (tangible assets like gold) and “things in action” (such as debt or shares in a company).
Furthermore, the Commission suggested the establishment of a panel of experts to provide legal advice to courts regarding matters related to digital assets. These recommendations aim to support the UK government’s objective of positioning the country as a global hub for crypto assets, as stated by the Law Commission in a press release.
Sarah Green, the law commissioner for commercial and common law, emphasized the significant growth and importance of digital assets in recent years, noting that the flexibility of the common law system in England and Wales enables it to adapt to this rapid evolution.
The Law Commission’s recommendations were seen as a balanced approach by industry experts. Adam Sanitt, knowledge director at Norton Rose Fulbright, one of the contributors to the report, stated that the suggested measures provide reassurance to many in the industry. Sanitt also highlighted that implementing these recommendations would enhance protection for crypto asset holders and support the government’s goal of establishing the UK as a technology hub.
The Commission additionally addressed the lack of legal certainty surrounding collateral arrangements involving crypto assets and proposed the creation of a dedicated legal framework to facilitate such situations. The report highlighted a strong demand for such law reform among consultees, market participants, and industry bodies.
The UK government has shown a commitment to embracing crypto asset technology, with Prime Minister Rishi Sunak expressing the ambition to make Britain a global hub in this field. The Law Commission’s report, taking a precise and surgical approach, aligns with this vision and provides a foundation for regulatory advancements in the crypto asset space.
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