The Law Commission of England and Wales has recommended that the government establish a new category of personal property to encompass crypto assets.
The independent body, which reviews and suggests legal reforms, highlighted the shortcomings of the current property classifications in addressing the complexities of digital assets in a recent report.
Currently, English law categorizes personal property into two types: tangible property (things in possession) and intangible property (things in action, such as debts or rights). The Commission argued that this binary classification inadequately addresses the dual nature of digital assets like cryptocurrencies and non-fungible tokens (NFTs), which can exhibit both tangible and intangible characteristics, leading to complications in legal disputes.
To address these issues, the Commission proposed the creation of a “third category” of personal property. This new classification would clarify and enforce property rights related to digital assets. The draft bill issued alongside the report suggests that this category would allow courts to define and adapt the legal framework for crypto assets without affecting the regulation of other personal property types
The government is currently reviewing the proposal and the draft legislation.
This development aligns with recent initiatives in the UK’s financial sector concerning digital assets. The Bank of England (BoE) and the Financial Conduct Authority (FCA) recently launched a consultation on draft guidance for their Digital Securities Sandbox (DSS). This five-year pilot program aims to provide a controlled environment for testing distributed ledger technology (DLT) in the trading and settlement of digital securities, including shares and bonds.
This DSS initiative, announced on April 3, is expected to lay the groundwork for a new regulatory framework for securities settlement in the UK, potentially reshaping the landscape of digital finance.
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