Independent body the Law Commission said on Thursday that Britain is developing a new category of private property law for digital assets like cryptocurrencies that are used to make payments or represent other assets.
Britain to be a global hub for crypto asset technology
Authorities from all over the world are moving to control the fast expanding crypto asset market, which European Union politicians have dubbed a “Wild West.”
Bitcoin and other cryptocurrencies had price increases in 2020 and 2021, but this year they have plummeted significantly. Additionally, NFTs, which are blockchain-based assets that represent digital files like photos, are multiplying quickly.
When he was finance minister, Rishi Sunak declared in April that he wanted to turn Britain into a center for cryptocurrency asset technology. He requested that the Law Commission examine the applicability of present laws to digital assets.
The Commission said on Thursday that many digital assets, such as non-fungible tokens, or NFTs, do not fit easily into current private property law.
“Our proposals aim to create a strong legal framework that offers greater consistency and protection for users and promotes an environment that is able to encourage further technological innovation,” said Sarah Green, the Law Commissioner for commercial and common law.
The two categories of personal property, “things in possession” (physical assets like gold) and “things in action” (such as debt or stock in a firm), will receive a third category called “data objects,” according to the Commission.
The Commission said in a report made available for public comment that a digital asset must be made of electronic data and satisfy other requirements, such as only being accessed by one person at a time, to fall under the new category.
Property rights are important because they can be used against anyone, not only the other party to a contract, unlike, for instance, contractual rights, according to Jason Rix, counsel and commercial litigation attorney at Allen & Overy law firm.
An additional consultation on the regulation of other categories of crypto assets is scheduled for later this year. Last week, Britain unveiled a draft law granting its regulators control over the use of stablecoins in payments.
