The Law Commission of England and Wales, an independent entity focused on legal reform, has recommended that the UK government recognize crypto assets as a separate category of personal property.
In a report published on July 30, the commission pointed out the limitations of the current property classification system. English law divides personal property into two categories: "things in possession" (physical property) and "things in action" (property that can only be claimed through court action, such as copyrights).
The commission argues that digital assets, including cryptocurrencies and non-fungible tokens (NFTs), don't fit into either of these categories. They suggest creating a new, third category for digital assets to ensure their unique properties are legally recognized and protected.
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To enact this change, the commission has drafted a bill proposing the establishment of this separate category for crypto assets. The bill expects the courts to develop and refine the new category, ensuring it integrates smoothly without disrupting existing property law.
This recommendation coincides with the Bank of England and the Financial Conduct Authority (FCA) engaging with the digital assets sector. In April, these institutions began consulting their proposed guidance for the Digital Securities Sandbox (DSS), a regime that allows financial market participants to test emerging technologies for trading and settling digital securities.
Such efforts highlight the UK's commitment to adapting to crypto, which provides greater legal clarity and fosters innovation in the digital economy.
