UK government introduces bill to define legal status of digital assets

The UK government has presented a new bill to Parliament aimed at defining the legal status of digital assets, including cryptocurrencies, non-fungible tokens (NFTs), and tokenised real-world assets (RWAs).

This legislation seeks to clarify that these digital assets will be recognized as personal property under British law, providing clearer legal guidelines for ownership and disputes.

Justice Minister Heidi Alexander outlined that the bill introduces a new category of personal property, termed a "thing," which will specifically apply to certain digital assets.

This is in addition to the existing classifications of "things in possession," such as physical items like money and cars, and "things in action," which cover intangible assets like debts and shares.

The new property category is intended to better accommodate the unique nature of digital assets, giving them specific legal recognition and protections.

Once the bill is enacted, it will assist legal professionals in navigating ownership disputes, particularly in scenarios like divorce proceedings.

It will also offer greater protection to owners of digital assets, both individuals and companies, who fall victim to fraud and scams.

The bill builds on earlier work by the Law Commission, which had conducted consultations and published a report recommending that certain digital assets be treated as property under English and Welsh law.

The Ministry of Justice clarified that these conclusions apply to a subset of digital assets, particularly focusing on crypto tokens.

The Law Commission's report noted, "We conclude that some digital assets are neither things in possession nor things in action, but that nonetheless, the law of England and Wales treats them as capable of being things to which personal property rights can relate."