- The Commission recommends recognizing a new category of personal property called “data objects.”
- According to Commission, crypto-tokens satisfy their proposed criteria of data objects and are appropriate objects of property rights.
- The U.K. is trying to earn a reputation as a global crypto hub.
- The new proposal applies only to England and Wales.
On July 28, U.K. Law Commission launched a proposal announcing its interest in extending property rules in Britain to cover crypto and non-fungible tokens (NFT). The Commission states the new proposal aims to deliver wider recognition and legal protections for digital assets, allowing a more diverse range of people and companies to interact online and benefit from them.
The Law Commission of England and Wales statement reads that the new proposal aims to help achieve the U.K. government’s goal of turning the country into a global crypto hub. However, the new proposals will not apply to Scotland or Northern Ireland.
Under the new proposal, the Commission recommends recognizing a new category of personal property called “data objects.” To fall under the new category, data objects should be things composed of data in an electronic form like software, databases, digital records, crypto, etc.
“We provisionally conclude that crypto-tokens satisfy our proposed criteria of data objects and are appropriate objects of property rights,” the Commission wrote. As per the proposal papers put for public consultation, the law commission members believe creating the third category would allow for a more nuanced consideration of new, emergent, and idiosyncratic things.
The consultation document further argues that existing property laws cannot accommodate digital assets due to their “many different features” and “unique qualities” compared to traditional physical assets. The Commission argues that the law must acknowledge the unique features of digital assets and help provide a strong legal foundation for the digital assets industry and its users.
Currently, the Law Commission is also seeking inputs from technologists and users to help examine how existing personal property laws apply to crypto. The England and Wales Legal Body has been behind making rules and regulations for digital assets since 2021. The public consultation on the rules is set to end on November 4.
U.K. Government has constantly been incentivizing the Commission to make rules that favor the digital asset industry to help achieve its goal of becoming a well-known crypto hub. Rishi Sunak, when he was the country’s Finance Minister, had said had asked the Law Commission to review whether current laws could accommodate digital assets. In 2021, the legal body concluded that existing laws could accommodate smart contracts, which are the lifeline of a blockchain system.
The recently published UK Financial Services and Markets Bill (FSMB) included a provision for regulating crypto assets and stablecoins for the first time. Earlier this month, the U.K. Treasury proposed legislation that seeks to extend existing rules for banking and payment systems to cover digital assets.