The law concerning digital assets, such as cryptocurrency and NFTs, is being reviewed to ensure the UK keeps pace with the evolving technology.

The review into digital assets will be conducted by the Law Commission of England and Wales to ensure that legislation can accommodate them as they continue to evolve and expand.

As an emerging technology, crypto assets are increasingly being used not just as a store of investment or speculation, but for their potential as a form of payment or use as equity or debt securities.

The commission’s proposals aim to deliver wider recognition and legal protections for digital assets, allowing a more diverse range of people, groups and companies to interact online and benefit from them.

While the law of England and Wales has gone some way to accommodate the rise of new technologies, the commission argues that there are several key areas that require law reform, to recognise and protect the rights of users and maximise the potential of digital assets.

As such, it is now seeking views from legal experts, technologists and users to determine how existing personal property law does — and should — apply to digital assets.

Law Commissioner for Commercial and Common Law Professor Sarah Green said: “Digital assets such as NFTs and other crypto tokens have evolved and proliferated at great speed, so it’s vital that our laws are adaptable enough to be able to accommodate them.

“Our proposals aim to create a strong legal framework that offers greater consistency and protection for users and promotes an environment that is able to encourage further technological innovation.

“It’s important that we focus on developing the right legal foundations to support these emerging technologies, rather than rushing to impose structures that could stifle their development. By clarifying the law, England and Wales could reap the potential rewards and position itself as a global hub for digital assets.”

Recommended

• 15 Scottish Traveltech companies to watch
• EU firms will lead on AI by 2024, suggests Accenture research
• UK Gov publishes review into automation in horticulture

Among the proposals to UK cryptocurrency law set out by the Law Commission are:

• Explicitly recognising a distinct category of personal property under the law which is better able to accommodate the unique features of digital assets. The distinct category is provisionally called “data objects”
• Options for how this distinct category of personal property could be developed and implemented under current law
• Clarifying the law around ownership and control of digital assets
• Clarifying the law around transfers and transactions involving digital assets

Adam Sanitt, knowledge director for digital and innovation at Norton Rose Fulbright, one of the law firms responding to the call for evidence, said: “We welcome the approach taken by the Law Commission on these proposals, particularly its recommended criteria for recognising digital assets as property.

“These proposals, once adopted, will provide greater legal clarity and protection for digital assets, which will assist the development of emerging technologies and many increasingly important sectors.

“As we explained to the commission, the fundamental distinction here is not between tangible and intangible objects but between objects that indisputably exist in the real world and those that have a purely legal existence. The real dividing line is not physical and non-physical, it is legal and non-legal.”

Get the latest news from DIGIT direct to your inbox

Our newsletter covers the latest technology and IT news from Scotland and beyond, as well as in-depth features and exclusive interviews with leading figures and rising stars.

To subscribe, click here.