The Property (Digital Assets etc) Bill has been introduced to Parliament aiming to clarify the law surrounding digital assets, including cryptocurrency.
The Bill intends to clarify that certain digital holdings including Cryptocurrency, non-fungible tokens such as digital art and carbon credits, can be considered as personal property, at law.
The Bill is the result of a recommendation made in June 2023 by the Law Commission of England and Wales.
Current law
English and Welsh law currently recognise two categories of property:
- ‘Things in possession’ such as gold, money and cars.
- ‘Things in action’ such as debts and shares.
These categories do not definitively include digital belongings.
While the Law Commission concluded that certain digital assets, including crypto-tokens and non-fungible tokens, were capable of attracting personal property rights, it observed that they are fundamentally different from both physical and rights-based assets and, as such, do not fit easily within traditional categories of personal property recognised in law.
Proposed Bill
The Property (Digital Assets etc) Bill makes clear that a 'thing', including one which is digital or electronic, is not prevented from being the object of personal property rights merely because it is neither a thing in possession nor a thing in action.
This third category of 'thing' will give legal protection to owners of certain digital assets against fraud and scams, while helping judges deal with complex cases where digital holdings are disputed or form part of settlements, for example in divorce cases.
Other recommendations
A second recommendation of the Law Commission has been accepted by the Government. An expert group on the control of digital assets will be established. This project will be taken forward by the UK Jurisdiction Taskforce.
HM Treasury is reviewing other recommendations made by the Law Commission. These include making statutory amendments to the Financial Collateral Arrangements Regulations and setting up a multi-disciplinary project to formulate a statutory framework for the entering into, operation and enforcement of certain crypto-token and crypto-asset collateral arrangements.
Useful guides on this topic
Cryptoassets: How are Bitcoin, cryptocurrencies or cryptoassets taxed in the UK?
How do you tax Bitcoin? Are cryptocurrency or cryptoasset gains or profits, taxable? Can you obtain tax relief if you make losses on Bitcoin? Gains on transactions in cryptoassets are potentially taxable in the same way as other investments.
External links
Ministry of Justice: New bill introduced in Parliament to clarify crypto’s legal status
UK Parliament: Government response to the Law Commission’s report on Digital Assets
UK Parliament: Property (Digital Assets etc) Bill
Law Commission: Property (Digital Assets etc) bill introduced into Parliament
