The UK government presents a bill to protect digital assets

According to TechCrunch, the UK government has introduced a new bill to Parliament aimed at providing legal protections for digital assets, including cryptocurrencies, non-fungible tokens (NFTs) and carbon credits. This legislative move comes as the cryptocurrency industry faces various regulatory challenges globally. In the United States, the Securities and Exchange Commission (SEC) has classified some crypto assets as securities and approved the first US-listed exchange-traded fund (ETF) to track Bitcoin. Likewise, the European Union (EU) is implementing new laws to regulate cryptocurrency and improve the traceability of transactions. The new UK Property (Digital Assets etc.) Bill seeks to legitimize digital assets as “personal property”, bringing them into line with traditional assets. This initiative follows a 2023 report by the Law Commission, which highlighted the need to update legal provisions on personal property rights. The report highlighted the growing importance of digital assets as technology advances and people spend more time online. It also aimed to ensure that private law in England and Wales remains competitive and flexible for market participants in the digital assets space. The concept of “personal property” is crucial in legal contexts such as bankruptcy, insolvency, theft, inheritance, and divorce proceedings. Currently, the law in England and Wales categorizes property into tangible assets, such as cars and jewellery, and intangible assets, such as shares and intellectual property. This leaves a gap for digital assets like Bitcoin and NFTs. The proposed third category would clarify what constitutes personal property, making it easier for courts to resolve disputes. For example, a court could issue a freezing injunction to prevent the dissipation of a digital asset before a dispute is resolved, similar to existing measures for physical products. Additionally, if a digital asset is stolen, more legal remedies would be available. The law would also allow digital assets to be included in a person’s estate for inheritance or bankruptcy proceedings. The bill, initially published in draft form in July, has now reached the first reading stage in the House of Lords. It will undergo various debates and iterations before moving to the House of Commons. While there is still a long way to go before the bill becomes law, the current majority Labor government increases the likelihood of its eventual passage. However, specific provisions and definitions, such as what constitutes a “digital asset,” remain unclear. The Law Commission recognizes potential “boundary issues” across the digital asset spectrum and recommends a “common law” approach, where courts may need to set precedent on a case-by-case basis. The Ministry of Justice and the Law Commission have indicated that the main focus of the law will be the protection of cryptographic tokens, such as cryptocurrencies and NFTs.