The U.K.’s Law Commission is mulling several reforms to the country’s law to see digital assets categorized differently. Accordingly, the English legal reform body is deliberating on whether crypto assets should be considered personal property or a financial product.
Lawmakers Propose Revolutionary Changes to Digital Asset Ownership
Britain is attempting to set the pace for comprehensive reform in the virtual asset landscape that would impact the evolving ecosystem. According to reports, the Law Commission of England and Wales has published a lengthy consultation document dubbed “Digital Assets: Consultation Paper.”
The content of the document proposes that digital assets be regarded as a type of personal property. This would effectively create what is known as the “internet of property,” with an effect on the United Kingdom’s position as a fintech and distributed ledger (DLT) technology hub.
On a broader scale, the U.K.’s decision to categorize cryptocurrency as personal property would also set the tone for global regulations.
The Law Commission, at the request of the British government, is reviewing the crypto space as it continues to expand in use and reach.
Moreover, the proposal considers the evolving use of cryptocurrency and other digital assets. Meanwhile, cryptocurrency is used in some places as a means of payment. It is generally seen in the industry as a store of value and a representation of ownership of digital assets.
Making a Case for Property Rights
There is a reason why London is seen as one of the world’s top financial hubs. Its bustling city, coupled with exceptional financial regulatory guidelines, has made it attractive for banks and other global financial services providers to set up a base in the country.
However, regarding cryptocurrency, the U.K., like other countries, has a gap to close in setting legal guidelines for the rapidly growing industry. Due to its complex nature, no jurisdiction has been able to address the recurring challenges of overseeing the digital assets space.
The British authorities have empowered the Law Commission of England and Wales as the only regulatory body to advise the government on reforms.
The Law Commission’s consultation document has identified property rights as the right guidelines to handle the crypto assets category. Under the property right, holders of digital funds can take legal action to protect their assets.
This is to prevent others from transferring them to other accounts. In addition, with legal backing, a crypto wallet holder can report to the police a theft incident.
However, the entire crypto ecosystem is about transferring tokens to other accounts where users can use them. The question is, do these processes count as legal transfers or another form of custody? Everything might appear to be working smoothly, but participants will start looking for answers when things hit the rocks.
Property rights for crypto assets will provide legal backing for digital currency owners. This, however, comes with real-life implications.