- The UK government tasked the Law Commission of England and Wales with analyzing the law regarding digital assets.
- The Law Commission of England and Wales published a list of recommendations for law amendment.
The UK aims to position itself as a leading crypto powerhouse globally, a sentiment shared by Prime Minister Rishi Sunak, who admitted it in April 2022. Moreover, this could be a timely intervention due to the recent regulatory power struggle in the U.S.
Crypto-related use cases have grown in the UK in investment, payment, equity securities, and general usage. However, as the complexity of the tech continues to increase, legal uncertainty about it has also.
For more than a decade, more than personal property law in the UK has been needed to cater to digital assets. Yet, more is required.
The UK government asked the Law Commission of England and Wales to conduct a thorough and first-of-its-kind standard law analysis. The premise was for the investigation to unearth what answer existing laws in England and Wales could have to emerging technology.
The Commission revealed that,
“Although some digital assets are not easy to place within traditional things to which personal property rights can relate, this does not prevent them from being capable of attracting personal property rights, and this is the position at common law.”
It further published a report with recommendations to reform and develop these rules.
Let’s take a look at them:
Legislation to confirm the existence of a distinct third category of personal property
It was argued that the common law offers the best opportunity to verify the place of digital assets as part of property law. Therefore, crypto tokens, NFTs, and the like can be considered personal property rights.
Creation of a panel of industry experts
A panel of technical pundits, legal specialists, and academics was necessary to offer the court insight on complicated issues on digital assets.
Creation of a legal framework
It was argued that a legal framework that enables the enforcement of collateral arrangements regarding crypto assets was essential.
Clarification of where certain digital assets fall under
Statutory law reform to verify whether digital assets fall under the scope of the Financial Collateral Arrangements (No. 2) Regulations 2003.
Overall, the commission believes that adding new categories for crypto to the existing laws would suffice, as opposed to making new laws. Many industry luminaries, like Professor Sarah Green, Law Commissioner for Commercial and Common Law; Justice Minister Mike Freer; Andrew Griffith, Economic Secretary to the Treasury, welcomed its efforts.
Similarly, most of the House of Lords lawmakers keep pushing for the adoption of the Financial Services and Markets Bill. This would further strengthen the case for more adoption in the country.
Crypto Industry Experts React to the News
Industry experts presented interesting insights on the news.
Jens LAUGESEN, luxury design brand advisor and metaverse keynote speaker said,
UK could of course push for blockchain adoption but is at the moment not really doing any education o the public or in education on these matters. I do also feel with the very thriving creative industries We have in UK this could make us more interesting joining creativity with technology and come up with creative/tech start up ideas that will bring new paradigm to the phygital prospect and integration of the metaverse with an evolutionary evolution from web 2 to 2.5 and ultimately 3 with focus in creative contents this is what makes people spend time in digital spaces.
Krishna Yogi, AI/ML Architect at SimplyFI SofTech commented saying:
It’s a fantastic move by UK and will enable many countries to follow their footsteps. There’s lot of confusion on digital assets at the moment as you know, but this will also mean many assets will be declared securities which will bankrupt them but the genuine assets like fan tokens and NFTs etc could see lot of attention and adoption powered by legal clarity.
In related news, the BRICS – a group of emerging economies, Brazil, Russia, India, China, and South Africa – push to reduce its reliance on the US dollar in international trade. To them, this move would boost the momentum of Bitcoin’s growth.
There are reports that the group has plans to create its currency, but something substantiated has yet to come out.
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