The UK government has moved a step closer to clarifying the status of cryptocurrency through the introduction of the Property (Digital Assets etc) Bill (the "Bill").
The Bill will codify into statute digital assets (such as cryptocurrencies and non-fungible tokens such as digital art) as personal property under English law. Currently, digital assets do not fall within either of the two traditional legal categories of property: either a thing in action or a thing in possession; leaving victims who have had their assets stolen or interfered with in uncharted territory. Whilst the English courts have sought to recognise such assets as property for the purposes of helping victims of scams and frauds make recoveries, this is a welcome step forward as if the Bill becomes law, there will be no doubt about the classification of digital assets as personal property.
In June 2023 the Law Commission published a report recommending a "third category" of property, to accompany these two existing categories. The Bill implements this recommendation by providing that:
“A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither - (a) a thing in possession, nor (b) a thing in action”.
The Bill will provide greater clarity and improved protection for owners of digital assets that become the victim of a scam, theft and/or fraud. They will be able utilise a number of legal remedies that are currently only available over assets that are classed as personal property.
The UK's ambition is to be considered a global hub for the trading of digital assets and financial technology. Such legislation is important for the UK to remain equipped to respond to new and evolving technologies so that it remains a favourable jurisdiction for digital assets businesses.
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