UK Law Commission proposes new legal reforms for crypto assets
UK Law Commission proposes new legal reforms for crypto assets
In a move to accommodate the evolving landscape of digital assets, the UK's Law Commission has recommended creating a distinct legal category for cryptocurrencies and related digital assets.
As reported by Cointelegraph, the Law Commission of England and Wales has proposed a landmark legal reform to better accommodate and protect digital assets, including cryptocurrencies and non-fungible tokens (NFTs). In its final report, the Commission recommends categorizing crypto assets as a new form of personal property.
The Law Commission, an independent body responsible for reviewing and recommending legal reforms, published its supplemental report on July 30. The report highlights the limitations of English law, which currently categorizes personal property into two types: tangible property (things in possession) and intangible property (things in action, such as debts or rights).
The Commission argues that digital assets, which often possess both tangible and intangible qualities, do not fit neatly into these categories. To address this issue, the Commission advocates for the creation of a "third category" of personal property. This new category would ensure that property rights related to crypto assets are clear and enforceable.
In support of this initiative, the Commission has issued a draft bill proposing the establishment of this distinct category for crypto assets. The draft bill suggests that the courts should develop and refine this third category, allowing for future amendments without disrupting existing legal proceedings related to other forms of personal property.
The UK government is currently considering the Commission's recommendations and the draft legislation.
In parallel, the Bank of England and the Financial Conduct Authority (FCA) have initiated a consultation on the draft guidance for their Digital Securities Sandbox. Launched on April 3, the sandbox aims to enable participants to test distributed ledger technology for trading and settling digital securities, such as shares and bonds.
The Law Commission's proposed legal reforms, if adopted, could significantly enhance the legal recognition and protection of digital assets, setting a precedent for other jurisdictions to follow.
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