The Law Commission of England and Wales has unveiled their groundbreaking Final Report on Digital Assets. This marks a major leap in the law's evolution to embrace crypto and digital assets.
The report concludes that the common law system in England and Wales is well placed to provide a coherent and globally relevant regime for existing and new types of digital asset.
- The introduction of a third category of personal property: the Law Commission concludes that the flexibility of common law allows for the recognition of a distinct category of personal property that can better recognise, accommodate and protect the unique features of certain digital assets (including crypto-tokens and cryptoassets). The Law Commission recommends legislation to confirm the existence of this category and remove any uncertainty.
- A panel of industry experts: To ensure that courts can respond sensitively to the complexity of emerging technology and apply the law to new fact patterns involving that technology, the Law Commission recommends that Government create a panel of industry experts who can provide guidance on technical and legal issues relating to digital assets.
- Future work on securitisation and collateralisation of crypto-tokenisation: the Report makes recommendations to provide market participants with legal tools that do not yet exist in England and Wales, such as new ways to take security over crypto-tokens and tokenised securities.
The Law Commission’s recommendations for reform and common law development aim to create a clear and consistent framework for digital assets that will provide greater clarity and security to users and market participants. The recommendations also support the Government’s goal of attracting technological development to cement the position of England and Wales as a global financial hub for crypto-tokens and crypto-assets.
More information about this work, including the Final Report, and a shorter summary of it, are available here: https://www.lawcom.gov.uk/project/digital-assets/.