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The Law Commission of England and Wales today published a proposal to reform the law relating to digital assets, including cryptocurrencies and non-fungible tokens (NFTs), and has put forth the idea to legally define these assets as personal property. The proposal includes categorising cryptocurrencies and NFTs under the term “data objects.”
Various jurisdictions have been uncertain about how to regulate cryptocurrencies, but the U.K. government is seeking to circumvent this issue and has tasked its independent statutory body with laws to explore how property rules can apply to digital assets in Wales and England. In a proposal set forth by the U.K. Law Commission on Thursday, the government has proposed to legally define digital assets including cryptocurrencies and NFTs as personal property. According to a statement by the Commission, such personal property will be categorised under the term “data objects” so as to "accommodate the unique features of digital assets.” In addition, the independent body will also investigate options for how “data objects” can be optimised. Finally, the Commission has been tasked to clarify the law around ownership, control, transfers, and transactions around digital assets.
The Commission notes that emerging technologies are increasingly being used for a variety of purposes, including being valuable in themselves, used as a form of payment, or used to represent or be linked to objects or rights, such as equity or debt securities, and has therefor become imperative to regulate.
The document proposal says,
It would allow the law to develop by analogy with things in possession or things in action where appropriate, while also recognizing that certain things do not fall neatly within either category.
The Law Commission hopes that clear definitions in property law for digital assets will make it easier to hit back at scams and hacks in court. Commercial and Common Law Commissioner Sarah Green explained why such clear-cut definitions are needed saying,
A lot of people just invest in NFTs, but they don’t ask the question ‘what happens when things go wrong?’
It’s not clear at all what happens if you hack into my wallet and take my bitcoin or if … this system fails and I can’t access my bitcoin.
Crypto regulations are heating up in the U.K. as politicians seek desperately to make it a global crypto hub. Although the Law Commission published its proposals today, it is still wrapping up the project and until then, nothing is official. It is likely, however, that the U.K. government will implement the policies in November.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.