(Kitco News) – Countries around the world continue to work on establishing clear regulations around digital assets, with lawmakers in the United Kingdom making the landmark step of introducing legislation that, if passed, would recognize digital assets as personal property under English and Welsh Law.
“The Property (Digital Assets etc) Bill, introduced in Parliament today, will mean that for the first time in British history, digital holdings including cryptocurrency, non-fungible tokens (NFTs) such as digital art, and carbon credits can be considered as personal property under the law,” the Ministry of Justice said in a press release. “Tech-savvy owners of Bitcoin (BTC) and other digital assets will benefit from greater legal protection thanks to an important clarification to the law.”
The Ministry added that the bill “will also ensure Britain maintains its pole position in the emerging global crypto race by being one of the first countries to recognize these assets in law.”
The decision to introduce the Bill comes in response to the Law Commission’s report in 2023, which identified barriers to the recognition of digital assets as property under English and Welsh private law and recommended feasible solutions.
While ‘digital asset’ is a broad term that encompasses a variety of things such as digital files, digital records, email accounts, digital carbon credits, cryptoassets, and NFTs, the Law Commission’s recommendations “only apply to a subset of digital assets, of which the main one is crypto tokens,” the Ministry said.
Up to this point, digital assets were not specifically included in English and Welsh property laws, which left owners in a legal gray area when it came to their involvement with matters of the court.
The two categories of property that currently exist are ‘things in possession,’ such as gold, money, and cars, and ‘things in action,’ which includes debts and stocks. The Property Bill introduces a third ‘thing’ category “to allow for certain digital assets to attract personal property rights,” the release said.
Classifying digital assets as property will help provide legal protection against fraud and scams for individuals and companies that hold them and will also help judges “deal with complex cases where digital holdings are disputed or form part of settlements, for example in divorce cases,” the Ministry said.
“Our world-leading legal services form a vital part of our economy, helping to drive forward growth and keep Britain at the heart of the international legal industry,” said Justice Minister Heidi Alexander. “It is essential that the law keeps pace with evolving technologies and this legislation will mean that the sector can maintain its position as a global leader in cryptoassets and bring clarity to complex property cases.”
Clarifying digital assets’ place in English and Welsh Law also means the UK legal sector will be better equipped to respond to new technologies, which will help attract more business and investment to the legal services industry, which is currently worth £34 billion a year to the economy.
The Ministry noted that estimates show that English law governs £250 billion of global mergers and acquisitions, along with 40% of global corporate arbitrations, “so keeping the law up to date is vital to ensuring that the UK remains the law of choice internationally.”
