The UK government has introduced a new bill to Parliament aimed at providing legal protections for digital assets, including cryptocurrencies, non-fungible tokens (NFTs), and carbon credits. The proposed Property (Digital Assets etc) Bill seeks to classify digital assets as “personal property,” putting them on par with traditional assets under UK law.
This initiative comes as global regulators, such as the U.S. Securities and Exchange Commission (SEC) and the European Union (EU), have moved to impose stricter oversight on the crypto sector. While the UK is also working on crypto regulations, this bill focuses on legitimizing digital assets within the legal framework for personal property, following recommendations from a 2023 Law Commission report.
The report underscored the growing importance of digital assets, as people spend more time online. It called for updates to personal property laws to ensure that England and Wales remain competitive and adaptable in the digital asset space. Currently, UK law recognizes two categories of property: tangible items, like cash and jewelry, and intangible items, such as shares and intellectual property. The proposed third category would address digital assets like cryptocurrencies and NFTs, filling a gap in existing legal definitions.
If passed, the bill would offer greater legal clarity and protections for digital assets, making it easier for courts to resolve disputes involving such assets. For example, a court could issue freezing orders on digital assets during legal disputes, similar to those already available for tangible items. Additionally, the bill would ensure digital assets are included in bankruptcy or inheritance cases.
The bill is currently in its early stages, having reached its first reading in the House of Lords. It must undergo further debates and revisions before being passed by both Houses of Parliament. With the Labour Party holding a majority, there is a strong possibility of the bill’s eventual passage, though the final form of the legislation remains unclear.
One key question is how “digital assets” will be defined under the new law, as they encompass a wide range of items, including email accounts, in-game assets, and carbon credits. The Law Commission has recommended a “common law” approach, meaning judges will set legal precedents on a case-by-case basis. However, the primary focus of the legislation is expected to be on crypto tokens, such as cryptocurrencies and NFTs.
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