Independent agency the Law Commission stated on Wednesday that the UK legal system may accept cryptocurrency assets by establishing a new category of personal property that would include digital assets.

The Law Commission stated in a paper commissioned by the government that digital assets like cryptocurrencies and non-fungible tokens (NFTs) do not fall under the conventional definitions of personal property.

As anticipated, the Commission suggested expanding the definition of personal property to include a third category of “digital objects” in addition to “things in possession” (physical assets like gold) and “things in action” (such as debt or stock in a corporation).

The group recommended that the government establish an expert panel to counsel courts on legal matters affecting digital assets.

The Law Commission stated in a statement that these actions will promote the UK government’s goal of developing into a centre for crypto assets.

“The use and importance of digital assets has grown significantly in the last few years,” said Sarah Green, law commissioner for commercial and common law.

“The flexibility of the common law means that the legal system in England and Wales is well placed to adapt to this rapid growth.”

When he was the finance minister in April 2022, Prime Minister Rishi Sunak declared his desire to turn Britain into a hub for cryptocurrency asset technology. He requested that the Law Commission examine the applicability of present laws to digital assets.

“The Law Commission has opted to wield the scalpel, not the sledgehammer, with these recommendations. This will be reassuring for many in the industry,” said Adam Sanitt, knowledge director at Norton Rose Fulbright, which contributed to the report.

Sanitt claimed that implementing the proposals will promote the government’s goal of transforming the UK into a tech centre and open the way for greater security for owners of crypto assets.

Additionally, the Commission stated that there was insufficient legal certainty about collateral agreements involving cryptocurrency assets and advised the government to create a special legal framework to support such circumstances.

“There is a very high degree of demand for such law reform among consultees, markets participants and industry bodies,” the report said.

(Adapted from TheStar.com)

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