Millions of crypto owners have gained stronger legal protection as the Property  (Digital Assets etc) Act received Royal  Assent  this week, in a boost to the UK legal services industry.

England, Wales and Northern Ireland are among the first countries in the world to confirm in law that digital assets – such as cryptocurrency or non-fungible tokens – can now be recognised as personal property. This will provide greater protections and ensure they are treated like traditional assets.

The new legislation ensures that the legal system is equipped to tackle tomorrow’s digital challenges today, cementing the UK’s reputation as a world leader in the legal services industry.

It means that fintech companies – from ambitious start-ups to global enterprises – are more likely to choose England, Wales, or Northern Ireland as places to do business – boosting growth in a sector already worth billions to the economy.

Minister for Courts and Legal Services, Sarah Sackman KC MP, said:

This new law will keep Britain at the heart of the international legal industry. By clarifying the status of digital assets, we remove uncertainty, simplify disputes, and cement the UK’s position as the centre for fintech innovation.

This government doesn’t adapt to change but leads it. Through our Plan for Change we will continue to boost growth across the £42.6 billion legal services sector.

Historically, the law in this country has recognised two categories of property: “things in possession” such as gold, cars, mobile phones and “things in action”, which are legal rights, for example, debts and shares. This new law allows for the development of a further category to allow for certain digital assets to have personal property while recognising their unique characteristics.

This means that as well as providing greater protection against scams, digital assets like cryptocurrency can be passed down through inheritance and recovered by creditors during bankruptcy, just like traditional assets.

With cryptocurrency fraud rising, owners also have clearer legal rights if their assets are stolen.

The reforms also reduce costly disputes by giving businesses legal certainty over the status of their crypto, bringing them into the same framework as jewellery and other goods.

The new law will attract further business and investment to the legal services industry which is already worth £42.6 billion a year to the economy with a highly skilled workforce of 384,000.  Keeping the law up to date is vital to ensuring that our law remains the law of choice for international businesses.

Notes

• Digital asset is an extremely broad term, encompassing a variety of things such as digital files, digital records, email accounts, digital carbon credits, cryptoassets and non-fungible tokens (NFTs). The Law Commission’s recommendations only apply to a subset of digital assets, of which the main one is cryptotokens.
• The action being taken on digital assets is in response to the Law Commission’s report in 2023. The MOJ commissioned the report to identify any barriers to the recognition of digital assets as property under English and Welsh private law and to recommend solutions.
• The Law Commission’s report summary

source: GOV