Law Commission Proposes Crypto as Property Legislation in England and Wales
The Law Commission, tasked with reviewing and recommending legal changes in England and Wales, has initiated a consultation on draft legislation to designate cryptocurrencies as property.
This comes as part of ongoing efforts to address the legal status of digital assets in traditional legal frameworks.
Last year, the independent statutory body released a report highlighting the property rights associated with crypto tokens and non-fungible tokens (NFTs). This report laid the groundwork for considering cryptocurrencies under property law. Stakeholders are invited to submit responses to the consultation by March 22nd.
Explaining the significance of the proposed legislation, the Law Commission emphasized the importance of personal property rights, particularly in scenarios involving insolvency or unlawful seizure of assets. However, it noted that digital assets present unique challenges due to their divergence from traditional concepts of personal property.
Additionally, the Law Commission has opened a call for evidence for its project on digital assets and electronic trade documents in private international law, with a deadline for comments set for May 16th. The responses received will shape the direction of future actions, according to CoinDesk.
For the crypto as property bill, the final version will be proposed to the government based on the feedback received. Meanwhile, the input gathered for the international documentation consultation will guide the subsequent phase of the project, potentially leading to proposals for law reform.
Sarah Green, the commissioner for commercial and common law, highlighted the transformative impact of digitization and decentralization on private international law. The Commission seeks to understand the compatibility of existing legal frameworks with digital assets and electronic trade documents, as well as the practical challenges faced by individuals and businesses in dealing with these assets.
The enactment of the Electronic Trade Document Act last year paved the way for the digitization of trade documents in the UK, reflecting a broader trend towards embracing digital solutions in legal practices.
It is worth noting that despite initial enthusiasm and high-profile encouragement, the cryptocurrency industry in the United Kingdom is facing significant hurdles.
A deep dive into the registry of virtual asset service providers, established by the Financial Conduct Authority (FCA) in 2020, reveals a stark reality. Despite 28 companies applying over the past year to offer crypto asset services, only four applications received the FCA’s seal of approval.
Among the approved entities are heavyweight players like Interactive Brokers, Bitstamp, Komainu backed by Nomura, and payments giant PayPal. In contrast, the number of withdrawn applications surpassed new registrations by tenfold, with 43 companies retracting their applications.
With this said, as the Law Commission continues its exploration of the legal implications of digital assets, stakeholders are encouraged to contribute their insights and experiences in shaping the future regulatory landscape governing cryptocurrencies and electronic trade documents in England and Wales.
