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As the crypto revolution gains momentum, the United Kingdom has proposed an innovative solution to accommodate the growing industry. The Law Commission, an independent body, put forth a proposal on Wednesday suggesting that digital assets, including cryptocurrencies and non-fungible tokens (NFTs), should be recognized as a distinct form of personal property, separate from traditional categories.
Currently, personal property is classified into two categories: "things in possession," such as tangible assets like gold, and "things in action," which include debts or shares. However, the increasing prominence of digital assets necessitates the introduction of a third category called "digital objects."
The Law Commission's proposal comes after an inquiry requested by former finance minister, now Prime Minister, Rishi Sunak, in April 2022. The objective was to position Britain as a global hub for the flourishing crypto asset technology.
The report also recommended the establishment of an expert panel to advise courts on legal complexities related to digital assets, highlighting the intricacies involved in addressing this issue.
Sarah Green, a law commissioner for commercial and common law, underscored the growing importance and usage of digital assets. She expressed confidence that England and Wales, with the flexibility of common law, are well-equipped to adapt to this rapid advancement.
In addition to accommodating digital assets, the Law Commission proposed the creation of a specific legal framework to address collateral arrangements involving crypto assets. This would enhance legal certainty in such situations, addressing a long-standing concern within the industry.
In response to these recommendations, Adam Sanitt, knowledge director at Norton Rose Fulbright, expressed that it would bring reassurance to many in the industry. He predicted that implementing these recommendations would provide greater security for crypto asset holders and contribute to the government's ambition of establishing the UK as a leading technological hotspot.
