The Law Commission of the United Kingdom is advocating for the establishment of a unique category of personal property that caters to the distinct characteristics of cryptocurrencies and digital assets.
In response to a directive from the British government, the commission conducted a comprehensive analysis of common law frameworks in England and Wales to determine how they can effectively accommodate digital assets, including non-fungible tokens (NFTs) and cryptocurrencies.
The most notable recommendation put forth by the commission is the creation of a fresh and distinct category of personal property specifically for digital assets.
The commission intentionally refrained from defining clear boundaries for this proposed category, asserting that the determination of which digital assets fall within this framework should be left to the discretion of the U.K.’s common law system.
According to a statement released by the commission and shared with Cointelegraph, the introduction of a new personal property category would enable a nuanced approach to recognizing a broad spectrum of digital assets, ranging from cryptocurrencies to digitized instruments like carbon emission credits or export quotas.
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In addition to this, the Law Commission proposed the establishment of a panel consisting of industry-specific technical experts, legal practitioners, academics, and judges.
This panel would be responsible for providing non-binding advice to courts regarding various legal issues and considerations pertaining to the digital asset sector.
Another key recommendation put forth by the commission is the development of a tailored legal framework aimed at facilitating the operation and enforcement of collateral arrangements.
Lastly, the commission called for statutory law reforms that would provide clarity on whether specific digital assets fall under the purview of the U.K.’s Financial Collateral Arrangements Regulations of 2003.
The Law Commission’s review of the legal challenges associated with the cryptocurrency sector commenced in October 2022 at the request of the Ministry of Justice.
Subsequently, in March 2023, the U.K. Treasury and Home Office announced their intentions to implement robust regulations on the cryptocurrency sector to combat its potential misuse for criminal activities.
